THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND
ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
Right to Purchase ___________ Shares of Common Stock
of Cortex Pharmaceuticals Inc.
_________________________
Common Stock Purchase Warrant
Cortex Pharmaceuticals Inc., a Delaware corporation having an address at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "COMPANY"), hereby certifies
that for Ten United States Dollars ($10.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
[______________________________________], having an address at
_______________________________ ("PURCHASER") or any other Warrant Holder is
entitled, on the terms and conditions set forth below, to purchase from the
Company at any time after the date hereof and ending forty-eight (48) months
from June 5, 1997 _____________________ shares of fully paid and
nonassessable shares of Common Stock, [________] par value, of the Company
(the "COMMON STOCK"), at the Exercise Price (hereinafter defined), as the
same may be adjusted pursuant to Section 5 herein.
1. DEFINITIONS.
(a) the term "ACT" shall mean the Securities Act of 1933, as amended.
(b) the term "ADJUSTMENT DATE" shall mean January 1, 1998 and each
January 1st thereafter during the term of this Warrant
(c) the term "ADJUSTMENT FACTOR" shall mean, with respect to any
Adjustment Date, the number determined by reference to the following table:
ADJUSTMENT DATE ADJUSTMENT FACTOR
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JANUARY 1, 1998 1.2
JANUARY 1, 1999 1.3
JANUARY 1, 2000 1.4
JANUARY 1, 2001 1.5
(d) the term "ADJUSTED EXERCISE PRICE" shall mean the Initial
Exercise Price MULTIPLIED BY the Adjustment Factor.
(e) the term "AVERAGE STOCK PRICE" shall have the meaning set forth
in the Certificate of Designation, Rights, Preferences and Privileges of the
Company's Series A Convertible Preferred Shares, as amended and in effect
from time to time.
(f) the term "EXCHANGE ACT" shall mean the Securities and Exchange
Act of 1934, as amended.
(g) the term "FIRST CLOSING DATE" shall have the meaning set forth
in the Subscription Agreement.
(h) the term "INITIAL EXERCISE PRICE" shall mean the Average Stock
Price immediately preceding the First Closing Date.
(i) the term "RULE 144" shall mean Rule 144 promulgated under the
Act, as amended, and any successor rules promulgated under the Act.
(j) the term "SEC" or "COMMISSION" shall mean the Securities and
Exchange Commission or any successor agency.
(k) the term "SUBSCRIPTION AGREEMENT" shall mean the Convertible
Securities Subscription Agreement by and between the Purchaser and the
Company, dated of June 5, 1997, as the same may be amended and in effect from
time to time.
(l) the term "WARRANT HOLDER" shall mean the Purchaser or any
assignee of all or any portion of this Warrant at any given time who, at the
time of assignment, acquired the right to purchase at least 2000 Warrant
Shares (such number being subject to adjustment after the date hereof
pursuant to Section 5 herein).
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(m) the term "WARRANT SHARES" shall mean the shares of Common Stock
or other securities issuable upon exercise of this Warrant.
(n) other terms used herein without definition which are defined in
the Subscription Agreement shall have the same meanings herein as therein.
2. EXERCISE OF WARRANT.
(a) EXERCISE. This Warrant may be exercised by the Warrant Holder,
in whole or in part, at any time and from time to time by surrender of this
Warrant, together with the form of subscription at the end hereof duly
executed by the Warrant Holder, and delivery of the Exercise Price (as
determined by reference to Section 2(c) below) for such Warrant Shares to the
Company, at the Company's principal office. In the event the Registration
Statement (as defined in the Registration Rights Agreement, of even date
herewith, by and between the Purchaser and the Company) is not declared
effective by the SEC by the seventy-fifth (75th) calendar day after the First
Closing Date, then as an alternative to the method of exercise described in
the first sentence of this Section 2(a), at any time thereafter when the
Registration Statement shall not be effective or be subject to a stop order
or other prohibition on sale of Common Stock thereunder, the Holder hereof
may exercise its right to purchase some or all of the shares of Common Stock
pursuant to this Warrant, on a net basis, such that, without the exchange of
any funds, the Holder hereof receives that number of shares of Common Stock
subscribed to pursuant to this Warrant less that number of shares of Common
Stock having an aggregate Average Stock Price at the time of exercise equal
to the aggregate Exercise Price that would otherwise have been paid by the
Holder for the number of shares of Common Stock subscribed to under this
Warrant.
(b) PARTIAL EXERCISES. In the event that the Warrant is not
exercised in full, the number of Warrant Shares shall be reduced by the
number of such Warrant Shares for which this Warrant is exercised, and the
Company, after receipt by it of a form of Warrant reflecting such adjusted
Warrant Shares, at its expense, shall forthwith issue and deliver to or upon
the order of the Warrant Holder a new Warrant of like tenor in the name of
the Warrant Holder or as the Warrant Holder (upon payment by the Warrant
Holder of any applicable transfer taxes) may request, reflecting such
adjusted Warrant Shares.
(c) DETERMINATION OF EXERCISE PRICE. For the period from the date
hereof until the first Adjustment Date, the Exercise Price shall be the
Initial Exercise Price. Thereafter on each Adjustment Date, if during the
most recent full calendar year immediately preceding such Adjustment Date (or
in the case of the January 1, 1998 Adjustment Date,
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during the period from the First Closing Date to December 31, 1997), the
Average Stock Price of the Common Stock was greater than or equal to the
Adjusted Exercise Price for any period of five (5) consecutive trading days,
then as of such Adjustment Date, the Exercise Price shall be the Adjusted
Exercise Price.
3. DELIVERY OF STOCK CERTIFICATES.
(a) Subject to the terms and conditions of this Warrant, as soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) business days thereafter, the Company at its expense
(including, without limitation, the payment by it of any applicable issue
taxes) will cause to be issued in the name of and delivered to the Warrant
Holder, or as the Warrant Holder (upon payment by the Warrant Holder of any
applicable transfer taxes) may lawfully direct, a certificate or certificates
for the number of fully paid and non- assessable shares of Common Stock to
which the Warrant Holder shall be entitled on such exercise, together with
any other stock or other securities or property (including cash, where
applicable) to which the Warrant Holder is entitled upon such exercise.
(b) This Warrant may not be exercised as to fractional shares of
Common Stock. In the event that the exercise of this Warrant, in full or in
part, would result in the issuance of any fractional share of Common Stock,
then the number of Warrant Shares for which this Warrant shall have been
exercised shall be rounded up or down to the nearest whole number of Warrant
Shares.
4. COVENANTS OF THE COMPANY.
(a) The Company shall use its best efforts to insure that a
Registration Statement under the Act covering the issuance of the Warrant
Shares and the resale or other disposition thereof by the Warrant Holder is
effective as provided in the Registration Rights Agreement.
(b) The Company shall take all necessary action and proceedings as
may be required and permitted by applicable law, rule and regulation,
including, without limitation the notification of the National Association of
Securities Dealer, Inc., for the legal and valid issuance of this Warrant and
the Warrant Shares to the Warrant Holder under this Warrant.
(c) From the date hereof through the last date on which this
Warrant is exercisable, the Company shall take all steps necessary and within
its control to insure that
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the Common Stock remains listed on Nasdaq and shall not amend its Certificate
of Incorporation or By-laws so as to adversely affect in any material way any
rights of the Warrant Holder under this Warrant.
(d) The Company shall at all times reserve and keep available,
solely for issuance and delivery as Warrant Shares hereunder, such shares of
Common Stock as shall from time to time be issuable as Warrant Shares.
(e) The Warrant Shares, when issued in accordance with the terms
hereof, will be duly authorized and, when issued in accordance with the terms
hereof, shall be validly issued, fully paid and non-assessable. The Company
has authorized and reserved for issuance to the Warrant Holder the requisite
number of shares of Common Stock to be issued pursuant to this Warrant.
(f) With a view to making available to the Warrant Holder the
benefits of Rule 144 promulgated under the Act and any other rule or
regulation of the SEC that may at any time permit the Warrant Holder to sell
securities of the Company to the public without registration, the Company
agrees to use its best efforts to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times;
(ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Exchange Act;
and
(iii) furnish to any Warrant Holder forthwith upon request a
written statement by the Company that it has complied with the
reporting requirements of Rule 144 and of the Act and the Exchange
Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company
as may be requested to permit any such Warrant Holder to take
advantage of any rule or regulation of the SEC permitting the selling
of any such securities without registration.
5. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The number of
and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
(a) SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES. If the Company
shall at any time after the date hereof but prior to the expiration of this
Warrant subdivide
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its outstanding securities as to which purchase rights under this Warrant
exist, by split-up, spin-off, or otherwise, or combine its outstanding
securities as to which purchase rights under this Warrant exist, the number
of Warrant Shares as to which this Warrant is exercisable as of the date of
such subdivision, split-up, spin-off or combination shall forthwith be
proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate adjustments shall also be
made to the purchase price payable per share, but the aggregate purchase
price payable for the total number of Warrant Shares purchasable under this
Warrant as of such date shall remain the same.
(b) STOCK DIVIDEND. If at any time after the date hereof the
Company declares a dividend or other distribution on Common Stock payable in
Common Stock or other securities or rights convertible into or exchangeable
or exercisable for Common Stock ("COMMON STOCK EQUIVALENTS") without payment
of any consideration by holders of Common Stock for the additional shares of
Common Stock or the Common Stock Equivalents (including the additional shares
of Common Stock issuable upon exercise or conversion thereof), then the
number of shares of Common Stock for which this Warrant may be exercised
shall be increased as of the record date (or the date of such dividend
distribution if no record date is set) for determining which holders of
Common Stock shall be entitled to receive such dividends, in proportion to
the increase in the number of outstanding shares (and shares of Common Stock
issuable upon conversion of all such securities convertible into Common
Stock) of Common Stock as a result of such dividend, and the Exercise Price
shall be adjusted so that the aggregate amount payable for the purchase of
all the Warrant Shares issuable hereunder immediately after the record date
(or on the date of such distribution, if applicable) for such dividend shall
equal the aggregate amount so payable immediately before such record date (or
on the date of such distribution, if applicable).
(c) OTHER DISTRIBUTIONS. If at any time after the date hereof the
Company distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares of its
capital stock, any evidence of indebtedness or any of its assets (other than
cash, Common Stock or securities convertible into Common Stock), then the
Company shall decrease the per share Exercise Price of this Warrant by an
appropriate amount based upon the value distributed on each share of Common
Stock as determined in good faith by the Company's Board of Directors.
(d) MERGER, ETC. The Company shall give written notice to the
Warrant Holder of any proposed merger or consolidation of the Company with or
into another entity or transfer of all or substantially all of the assets of
the Company to another entity at least
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two weeks prior to the planned effective date of such transaction. The
Warrant Holder shall be entitled just prior to such transfer, merger or
consolidation becoming effective, and upon payment of the aggregate Exercise
Price then in effect, to exercise this Warrant. If the notice described in
this Section 5(d) is given and Warrant Holder elects not to exercise this
Warrant prior to such transfer, merger or consolidation becoming effective,
then this Warrant shall expire upon the effective date of such transfer,
merger or consolidation. In the event the Company fails to give the notice
described in this Section 5(d) then the Warrant Holder shall be entitled to
receive upon such transfer, merger or consolidation becoming effective, and
upon payment of the aggregate Exercise Price in effect as of such effective
date, the number of shares or other securities or property of the Company or
of the successor corporation resulting from such merger or consolidation,
which would have been received by the Warrant Holder for the shares of stock
subject to this Warrant had this Warrant been exercised just prior to such
transfer, merger or consolidation becoming effective.
(e) RECLASSIFICATION, ETC. If at any time after the date hereof
there shall be a reorganization or reclassification of the securities as to
which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Warrant Holder
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and upon payment of the Exercise Price then in
effect, the number of shares or other securities or property resulting from
such reorganization or reclassification, which would have been received by
the Warrant Holder for the shares of stock subject to this Warrant had this
Warrant at such time been exercised.
(f) EXERCISE PRICE ADJUSTMENT. In the event that the Company
issues or sells any Common Stock or securities which are convertible into or
exchangeable for its Common Stock, or any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of, its Common
Stock or any such convertible or exchangeable securities (other than shares
or options issued or which may be issued pursuant to the Company's employee,
consultant or director option plans or shares issued upon exercise of
options, warrants or rights outstanding on the date of the Subscription
Agreement and listed in the Exchange Act Reports) at an effective purchase
price per share which is less than product of (.75) multiplied by the Average
Stock Price of the Common Stock immediately preceding such issue or sale,
then in each such case, the Exercise Price in effect immediately prior to
such issue or sale shall be reduced effective concurrently with such issue or
sale to an amount determined by multiplying the Exercise Price then in effect
by a fraction, (x) the numerator of which shall be the sum of (1) the number
of shares of Common Stock outstanding immediately prior to such issue or
sale, including, without duplication, those deemed to have been issued under
any provision of the Certificate of Designation and the Warrants, PLUS (2)
the number of shares of Common Stock which the aggregate consideration
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received by the Company for such additional shares would purchase at such
Average Stock Price or Exercise Price, as the case may be, then in effect;
and (y) the denominator of which shall be the number of shares of Common
Stock of the Company outstanding immediately after such issue or sale
including, without duplication, those deemed to have been issued under any
provision of the Certificate of Designation and Warrants. For purposes of the
foregoing fraction, Common Stock outstanding shall include, without
limitation, any then outstanding warrants and options for Common Stock or
securities of the Company convertible into shares of Common Stock, whether or
not they are exercisable or convertible when such fraction is to be
determined.
The number of shares which may be purchased hereunder shall be increased
proportionately to any reduction in Exercise Price pursuant to this paragraph
5(f), so that after such adjustments the aggregate Exercise Price payable
hereunder for the increased number of shares shall be the same as the
aggregate Exercise Price in effect just prior to such adjustments.
Upon the expiration or termination, prior to exercise, conversion or
exchange thereof, of (i) any securities which are convertible into or
exchangeable for Common Stock, (ii) any warrants or other rights to subscribe
for or to purchase Common Stock, or (iii) any options for the purchase of
Common Stock, which the issuance or sale thereof by the Company gave rise to
any adjustment to the Exercise Price pursuant to this Section 5(f),
appropriate re-adjustments shall be made to the Exercise Price so that the
Exercise Price is that same as it would have been had such unexercised,
unconverted or unexchanged securities, warrants or options had never been
issued or sold.
6. NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the Warrant Holder against impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase the par value
of any Warrant Shares above the amount payable therefor on such exercise, and
(b) will take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares on the exercise of this Warrant.
7. NOTICE OF ADJUSTMENTS; NOTICES. Whenever the Exercise Price or
number of Shares purchasable hereunder shall be adjusted pursuant to Section
5 hereof, the Company
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shall execute and deliver to the Warrant Holder a certificate setting forth,
in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the
Exercise Price and number of shares purchasable hereunder after giving effect
to such adjustment, and shall cause a copy of such certificate to be mailed
(by first class mail, postage prepaid) to the Warrant Holder.
8. RIGHTS AS STOCKHOLDER. Prior to exercise of this Warrant, the
Warrant Holder shall not be entitled to any rights as a stockholder of the
Company with respect to the Warrant Shares, including (without limitation)
the right to vote such shares, receive dividends or other distributions
thereon or be notified of stockholder meetings. However, in the event of any
taking by the Company of a record of the holders of any class of securities
for the purpose of determining the holders thereof who are entitled to
receive any dividend (other than a cash dividend) or other distribution, any
right to subscribe for, purchase or otherwise acquire any shares of stock of
any class or any other securities or property, or to receive any other right,
the Company shall mail to each Warrant Holder, at least 10 days prior to the
date specified therein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
the amount and character of such dividend, distribution or right.
9. REPLACEMENT OF WARRANT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
the Warrant and, in the case of any such loss, theft or destruction of the
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company, upon
receipt by it of a form of Warrant reflecting the terms of the new Warrant,
at its expense will execute and deliver, in lieu thereof, a new Warrant of
like tenor.
10. SPECIFIC ENFORCEMENT; CONSENT TO JURISDICTION.
(a) The Company and the Warrant Holder acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of
this Warrant were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Warrant and to enforce specifically the terms and
provisions hereof, this being in addition to any other remedy to which either
of them may be entitled by law or equity.
(b) Each of the Company and the Warrant Holder (i) hereby
irrevocably submits to the exclusive jurisdiction of the United States
District Court for the
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Southern District of New York for the purposes of any suit, action or
proceeding arising out of or relating to this Warrant and (ii) hereby waives,
and agrees not to assert in any such suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of such court, that the
suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper. Each of the Company and
the Warrant Holder consents to process being served in any such suit, action
or proceeding by mailing via certified mail a copy thereof to such party at
the address in effect for notices to it under this Warrant and agrees that
such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this paragraph shall affect or limit any right to
serve process in any other manner permitted by law.
11. ENTIRE AGREEMENT; AMENDMENTS. This Warrant, the Exhibits hereto and
the provisions contained in the Subscription Agreement, the Certificate of
Designation or the Registration Rights Agreement and incorporated into this
Warrant and the Warrant Shares contain the entire understanding of the
parties with respect to the matters covered hereby and thereby and, except as
specifically set forth herein and therein, neither the Company nor the
Warrant Holder makes any representation, warranty, covenant or undertaking
with respect to such matters. No provision of this Agreement may be waived
or amended other than by a written instrument signed by the party against
whom enforcement of any such amendment or waiver is sought.
12. RESTRICTED SECURITIES. Sections 4.5, 5.1, 5.2 and 5.3 of the
Subscription Agreement are incorporated herein by reference and hereby made a
part hereof.
13. NOTICES. Unless otherwise provided herein, notices and other
deliveries to be made hereunder shall be made by hand or by registered or
certified mail (return receipt requested and postage and charges prepaid), by
a nationally recognized overnight courier (charges prepaid), or by telecopier
(in which case a copy shall also be sent by nationally recognized overnight
courier).
to the Company:
Cortex Pharmaceuticals Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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with copies to:
Stradling, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇
P.O. Box 7680
Newport Beach, CA 92660-6441
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
to the Warrant Holder:
Attn:
Fax:
with copies to:
Attn:
Fax:
Such notices and other deliveries shall be deemed delivered and received, if
made by hand or telecopier on the date given, if made by overnight courier,
on the next business day after the date deposited with such courier with
instructions and prepayment for next day delivery, and if sent by registered
or certified mail, on the third business day following the mailing thereof.
Either party hereto may from time to time change its address for notices
under this Section 13 by giving at least 10 days prior written notice of such
changed address to the other party hereto.
14. MISCELLANEOUS. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver,
discharge or termination is sought. This Warrant shall be construed and
enforced in accordance with and governed by the laws of the State of New
York. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The invalidity
or unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision.
15. EXPIRATION. The right to exercise this Warrant shall expire
forty-eight (48) months after June 5, 1997.
[Signatures on next page.]
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Dated: June 5, 1997 CORTEX PHARMACEUTICALS INC.
By:________________________
Title:_____________________
[CORPORATE SEAL]
Attest:
By:_______________________
Its:
NAME OF INVESTOR:
[ ]
By:
Title:
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FORM OF WARRANT EXERCISE
(TO BE SIGNED ONLY ON EXERCISE OF WARRANT)
TO _________________________
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, _________
shares of Common Stock of Cortex Pharmaceuticals Inc., a Delaware corporation
(the "COMPANY"), and herewith makes payment of $__________ therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to _________________, whose address is __________________.
Dated: ___________________________
(Signature must conform to
name of holder as specified
on the face of the Warrant)
___________________________
(Address)
Tax Identification
Number:____________________
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FORM OF ASSIGNMENT
(TO BE SIGNED ONLY ON TRANSFER OF WARRANT)
For value received, the undersigned hereby sells, assigns, and transfers unto
_________________ the right represented by the within Warrant to purchase
_____________ shares of Common Stock of Cortex Pharmaceuticals Inc., a
Delaware corporation, to which the within Warrant relates, and appoints
_________________ Attorney to transfer such right on the books of Cortex
Pharmaceuticals Inc., with full power of substitution the premises.
Dated: ___________________________
(Signature must conform to
name of holder as specified
on the face of the Warrant)
___________________________
(Address)
Signed in the presence of:
____________________________