EXHIBIT 10.1
____________
PHARMOS CORPORATION
FORM OF
UNIT PURCHASE AGREEMENT
THIS UNIT PURCHASE AGREEMENT is made as of September 14,
1995 by and between Pharmos Corporation (the "Company"), a Nevada
corporation having its principal offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, and the parties listed on Exhibit A attached
hereto (collectively, the "Investors").
BACKGROUND
__________
A. The Company has provided the Investors with information
regarding the Company and the Company's Common Stock, par value
$.03 per share ("Common Stock").
B. Based upon the Investors' review of the information
provided to the Investors by the Company, the Investors'
discussions with representatives of the Company, the Investors'
independent investigation of the Company and their reliance on
the warranties and representations made by the Company herein,
the Investors desire to purchase an aggregate of _________ Units,
each Unit consisting of one (1) share of Common Stock and .075
immediately detachable warrants to purchase one share of Common
Stock ("Warrants"), upon the terms and conditions set forth
herein.
C. Based upon an investigation of the Investors'
experience in financial investments, its reliance on the
representations made by the Investors herein, and upon the
Investors' ability to evaluate the merits and risks of the
transaction contemplated hereby and to bear the economic risk
thereof, the Company wishes to sell an aggregate of _________
Units to the Investors upon the terms and conditions set forth
herein.
NOW THEREFORE, in consideration of the premises and for
other good and lawful considerations, the receipt and sufficiency
of which is hereby acknowledged, the parties, intending to be
legally bound, do hereby agree:
AGREEMENT
_________
1. Sale of Stock.
1.1 Authorization. The Company has duly authorized the
issuance and sale of 6,000,000 Units, of which _________ are
being issued and sold in accordance with the terms of this
Agreement.
1.2 Sale of Units. Subject to the terms and conditions of
this Agreement, at the Closing (as hereinafter defined) the
Company shall sell and issue to each of the Investors, and each
of the Investors shall purchase, the number of Units set forth
opposite the Investors' respective names on Exhibit A attached
hereto at a price of One Dollar and Fifty Cents ($1.50) per Unit.
The shares of Common Stock included in the Units are referred to
herein as the "Shares." The obligation of each of the Investors
to purchase the Shares shall be several and not joint. The
Warrants included in the Units will be issued in accordance with
the provisions of the Warrant Agreement between the Company and
[one of the two finders], on behalf of the Investors, the form of
which is attached hereto as Exhibit B.
1.3 Closing. The purchase and sale of the shares shall
take place at the offices of the Company, New York, NY at 10:00
A.M. on September 14, 1995 or at such other time and place as the
Company and the Investors shall mutually agree orally or in
writing (which time and place are referred to herein as the
"Closing"). At the Closing, the Company will deliver to each of
the Investors (i) a copy of an irrevocable letter of instructions
to the registrar and transfer agent of the Company's Common Stock
relating to the issuance of certificates representing the Shares
included in the Units and (ii) a certificate representing the
Warrants included in the Units, against payment by each of them
to the Company of the purchase price therefor by wire transfer of
immediately available U.S. funds or other method acceptable to
the Company, with certificates representing the Shares to be
delivered to each Investor within ten (10) days after the
Closing.
1.4 Legend. The certificates representing the Shares to be
issued at Closing will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED, OR HYPOTHECATED EXCEPT PURSUANT TO
(i) A REGISTRATION STATEMENT WITH RESPECT TO
SUCH SECURITIES THAT IS EFFECTIVE UNDER SUCH
ACT, (ii) RULE 144 OR RULE 144A UNDER SUCH
ACT, OR (iii) ANY OTHER EXEMPTION FROM
REGISTRATION UNDER SUCH ACT RELATING TO THE
DISPOSITION OF SECURITIES.
2. Representations and Warranties of the Company. The
Company does hereby represent and warrant to the Investors that:
2.1 Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada. The Company has full
power and authority to own or lease and to operate its properties
and to conduct its business as presently conducted. The Company
is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the failure to so
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qualify would have a material adverse effect on the operations or
financial condition of the Company.
2.2 Authority. The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby have been duly authorized
by all necessary corporate action. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and
binding obligation of the Company, enforceable in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the rights and
remedies of creditors generally and as may be limited by general
equitable principles.
2.3 Non-Contravention. The execution of, performance under
and compliance with this Agreement by the Company will not
violate any provision of law and will not conflict with or result
in any breach of any of the terms, conditions, or provisions of,
or constitute, with or without the passage of time or the giving
of notice, a default under, or give to any person the right to
exercise any remedy under, or to accelerate the maturity of, or
to cancel, terminate or modify, or require a consent or waiver
under, its Articles of Incorporation or By-laws (each as amended
and presently in effect) or any indenture, lease, agreement or
other instrument to which the Company is a party or by which it
or any of its properties is bound.
2.4 Capitalization. The authorized capital stock of the
Company (immediately prior to the Closing) is 50,000,000 shares
of Common Stock, par value $.03 per share, of which 23,130,679
shares are issued and outstanding, and 1,250,000 shares of
undesignated preferred stock, no par value per share, of which no
shares are issued. All of such outstanding common shares have
been validly issued and are fully paid and non-assessable. No
class of capital stock of the Company is entitled to preemptive
rights. Since June 30, 1995, the Company has not changed the
amount of its authorized capital stock or purchased any shares of
its capital stock, or subdivided or otherwise changed any shares
of any class of its capital stock, whether by way of
reclassification, recapitalization, stock split or otherwise, or
issued or reissued, or agreed to issue or reissue, any of its
capital stock, except the issuance of 2,057,692 shares of Common
Stock upon the conversion of $1,070,000 principal amount
convertible debentures in July 1995 ($200,000 principal amount of
convertible debentures having been converted in June 1995)
pursuant to a Convertible Debenture Purchase Agreement dated
February 7, 1995 (the "Convertible Debenture Private Placement")
and has not since such date declared or paid any dividend in cash
or stock or made any other distribution of assets to its
shareholders. Except as described in the SEC Reports (as
hereinafter defined) and pursuant to this Agreement, at the date
hereof, there are no shares of capital stock or other equity
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securities of the Company's outstanding and no outstanding
options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or
securities or rights convertible into, shares of any capital
stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings, or arrangements by which the Company
or any of its subsidiaries is or may become bound to issue
additional shares of its capital stock or options, warrants or
rights to purchase or acquire any shares of its capital stock.
2.5 Validity of Shares. The Shares have been duly
authorized and reserved for issuance and, upon their issuance in
accordance with the terms hereof, will be validly issued, fully
paid and non-assessable. The Common Stock is traded on NASDAQ
SmallCap Market.
2.6 SEC Reports. The Company has furnished each of the
Investors copies of its Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, its Quarterly Report on Form 10-Q
for the three months ended March 31, 1995, its Quarterly Report
on Form 10-Q for the six months ended June 30, 1995, its Current
Report on Form 8-K, dated April 10, 1995, its Current Report on
Form 8-K, dated April 26, 1995, as amended, and its Current
Report on Form 8-K, dated July 5, 1995 (collectively the "SEC
Reports"), as filed with the Securities and Exchange Commission.
The SEC Reports did not on the date of filing contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading.
2.7 Compliance with Law. The Company is not in default
with respect to any judgment, order, writ, injunction, decree or
award, and the Company is not in violation of, and the business
of the Company is presently being conducted so as to comply in
all material respects with, applicable Federal, state and local
governmental laws and regulations, including, without limitation,
laws and regulations relating to environmental requirements (such
as requirements in respect of air, water and noise pollution)
drug testing, manufacturing and distribution, and to employment
practices (such as practices in respect of discrimination, wage
and hour and health and safety), all to the extent necessary to
avoid any material adverse effect on the business, properties or
financial condition of the Company.
2.8 Use of Proceeds. The Company will use the proceeds of
the sale of the Units for working capital purposes.
2.9 Governmental Consent, etc. The Company is not required
to obtain any consent, approval or authorization of, or to make
any declaration or filing with, any governmental authority as a
condition to or in connection with the valid execution, delivery
and performance of this Agreement and the valid offer, sale or
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delivery of the Units, or the performance by the Company of its
obligations in respect thereof.
2.10 Taxes. The Company and its subsidiaries have filed or
caused to be filed, or will file within the time period
prescribed by law, all federal and state income tax returns which
are required to be filed and have paid or caused to be paid all
taxes to the extent that such taxes have become due and payable,
except taxes the validity or amount of which is being contested
in good faith by appropriate proceedings and with respect to
which adequate reserves have been set aside. The Company has
paid or caused to be paid, or has established reserves adequate
in all material respects, for all Federal income tax liabilities
and state income tax liabilities applicable to the Company for
all fiscal years which have not been examined and reported on by
the taxing authorities (or closed by applicable statutes).
2.11 Disclosure. Neither this Agreement nor the SEC Reports
nor any written disclosure statement furnished to the Investors
by or on behalf of the Company in connection with the
transactions contemplated hereby contains any untrue statement of
a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not
misleading. There is no fact which the Company has not disclosed
to the Investors in writing which materially affects adversely
the properties, business or financial condition of the Company
and its subsidiaries taken as a whole or, so far as the Company
can now reasonably foresee, will materially affect adversely the
ability of the Company to perform this Agreement.
2.12 Material Adverse Change. Except as disclosed in the
SEC Reports or as otherwise previously summarized in writing to
the Investors and identified as an exception to this
representation (provided that such summary shall be accurate in
all material respects, and shall not contain any material
misstatements or omissions), there has been no material adverse
change in the business, financial condition, or results of
operations of the Company since June 30, 1995.
2.13 Actions Pending. Except as described in the SEC
Reports or as previously reported to the Investors in writing,
there are no actions, suits, investigations or proceedings
pending or, to the best knowledge of the Company, threatened
against or affecting the Company or any properties or rights of
the Company before any courts, governmental bodies, arbitration
boards or other tribunals, which if decided adversely to the
Company could reasonably be expected, individually or in the
aggregate, to result in any material adverse change in the
business, financial condition or results of operations of the
Company and its subsidiaries taken as a whole.
2.14 ERISA. No accumulated funding deficiency (as defined
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in Section 302 of ERISA and Section 412 of the Internal Revenue
Code of 1986, as amended (the "Code")), whether or not waived,
exists with respect to any Plan (as defined below) (other than a
Multiemployer Plan (as defined below)). No liability to the
Pension Benefit Guaranty Corporation has been incurred with
respect to any Plan (other than a Multiemployer Plan) by the
company which is or would be materially adverse to the Company
taken as a whole. Neither the Company nor any of its
subsidiaries has incurred any withdrawal liability under Title IV
of ERISA with respect to any Multiemployer Plan which is or would
be materially adverse to the Company and its subsidiaries taken
as a whole. The execution and delivery of this Agreement and the
sale of the Units will not involve any transaction which is
subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section
4975 of the Code. As used in this Section 2.14, the term "Plan"
shall mean an "employee pension benefit plan" (as defined in
Section 392 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by
the Company or by any trade or business, whether or not
incorporated, which, together with the Company, is under common
control, as described in Section 414(b) or (c) of the Code; and
the term "Multiemployer Plan" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section
4001(a)(3) of ERISA).
2.15 Possession of Franchises, Licenses, etc. To the
Company's best knowledge, the Company possesses all franchises,
certificates, licenses, permits and other authorizations from
governmental political subdivisions or regulatory authorities
that are necessary in any material respect for the ownership,
maintenance and operation of their respective properties and
assets, and to conduct the businesses now conducted or proposed
to be conducted, and the Company is not in violation of any
thereof in any material respect.
2.16 Trademarks, Patents, etc. To the Company's best
knowledge, the Company owns, or possesses the right to use to the
extent necessary in its businesses, all trade secrets,
trademarks, trade names, copyrights, patents, patent rights,
computer software, licenses and other assets considered to be
"intangible assets" in accordance with generally accepted
accounting principles (collectively, "Intangible Assets") that
are used or are necessary in any material respect in the conduct
of its business as now operated. No such Intangible Asset, to
the best knowledge of the Company, conflicts with the valid trade
secret, trademark, trade name, copyright, patent, patent right or
other Intangible Asset of any other person.
2.17 Employee Matters. There is no strike, work stoppage or
labor dispute with any union or group of employees pending or, to
the best knowledge of the Company, threatened involving the Company.
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2.18 Financial Statements. The Company has furnished to
each of the Investors the SEC Reports, which contain certain
financial information. Said financial statements included in the
SEC Reports, including in each case the related notes, fairly
present the financial position of the Company as of the
respective dates of said balance sheets and the results of the
operations of the Company for the respective periods covered by
said statements of operations and retained earnings and changes
in financial position, and have been prepared in accordance with
generally accepted accounting principles consistently applied by
the Company throughout the periods involved and the Company has
no knowledge of any material liabilities contingent or otherwise,
not reflected in said balance sheet as of said date or in the SEC
Reports.
2.19 No Change of Control. Consummation of the transactions
contemplated by this Agreement will not constitute a "change of
control" or "change in control" or any other event of similar
import as defined in any agreement to which the Company is a
party, and will not subject any of the Investors to the
provisions of Sections 78.378 through 78.3793 or Sections 78.411
through 78.444 of the Nevada Corporate law.
2.20 No General Solicitation. The sale of the Units
hereunder is exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the
"Securities Act"). In connection with the issuance and sale of
the Units, no form of general solicitation or general advertising
was used by the Company or any of its representatives including,
but not limited to advertisements, articles, notices or other
communications published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or
meeting whose attendees had been invited by any general
solicitation or general advertising. Except for the Convertible
Debenture Private Placement and the issuance of 6,000,000 shares
of Common Stock and certain warrants in connection with the
Company's acquisition of Oculon Corporation in April 1995, no
securities of the same class as the Shares have been issued and
sold by the Company within the six month period immediately prior
to the date hereof.
3. Representation of the Investors. Each of the Investors
severally but not jointly represents and warrants to the Company
that:
3.1 Investment. Each of the Investors is acquiring the
Units for its own account for investment and not with a view to,
or for sale in connection with, any distribution thereof which
would be in violation of the securities laws of the United
States, and any sale, transfer or other disposition of any Shares
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by Investor will be made in compliance with all applicable
provisions of the Securities Act of 1933 as amended (the
"Securities Act") and the rules and regulations promulgated
thereunder.
3.2 Authority. Each of the Investors has full power and
authority to enter into, to perform under and comply with this
Agreement and this Agreement constitutes the valid and binding
obligation of each of the Investors enforceable in accordance
with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws limiting the
rights and remedies of creditors generally and as may be limited
by general equitable principles.
3.3 Experience. Each of the Investors is knowledgeable as
to the business of the Company and has received all information
that it has requested from the Company. Each of the Investors
has adequate net worth and means of providing for its current
needs and contingencies to sustain a complete loss of its
investment in the Company.
3.4 Accredited Investor. Each of the Investors is an
Accredited Investor as such term is defined in the Securities
Act, Rule 501(a).
3.5 Non-Contravention. The execution of, performance under
and compliance with this Agreement by the Investors will not
violate any provision of law and will not conflict with or result
in any breach of any of the terms, conditions, or provisions of,
or constitute, with or without the passage of time or the giving
of notice, a default under, or require a consent or waiver under,
any indenture, lease, agreement or other instrument to which any
of the Investors is a party or by which any of the Investors or
any of its properties is bound except as would not have a
material adverse effect on the business, financial condition or
results of operations of such Investors.
3.6 Ownership of Company Securities. Each of the Investors
owns that number of shares of Common Stock of the Company as of
the date hereof as set forth on Exhibit A hereto.
4. Closing Conditions. The obligations of each of the
parties hereto shall be subject to the satisfaction or waiver of
each of the following conditions:
4.1 No Judgments or Actions. There shall not be in effect
a judgment, order or decree of a court of competent jurisdiction
that prevents or delays the consummation of the transactions
contemplated hereby. There shall not be any actions, suits,
investigations or proceedings pending or to the best knowledge of
the Company threatened against or affecting the Company or its
properties which, if adversely determined, would interfere with
or adversely affect the issuance of the Shares or the Warrants.
8
4.2 Representations and Warranties. The representations
and warranties of the other party hereto shall have been true
when made and shall be true at and as of the Closing as though
made at and as of such date.
4.3 Approvals and Consents. The Company shall have
received all consents and approvals required in connection with
the issuance of the Shares and the Warrants, including, without
limitation, those required by law, any contract or agreement to
which the Company is a party or any securities exchange on which
the Company's securities are listed or quoted.
4.4 Officer's Certificate. The Company shall have
delivered the certificate of an executive officer of the Company
to the effect that the foregoing conditions to closing have, to
such officer's best knowledge, been satisfied.
4.5 Legal Opinion. A favorable written opinion of
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, in a form
satisfactory to the Investors shall have been delivered with
respect to due authorization and valid issuance of the Shares and
the Warrants, due execution and enforceability of this Agreement,
and good standing of the Company. Such counsel may rely as to
matters of Nevada law on an opinion of local counsel.
4.6 Satisfactory Proceedings. All proceedings taken in
connection with the sale of the Shares and all documents relating
thereto shall be satisfactory in form and substance to each of
the Investors. Each of the Investors shall have received copies
of such documents as they may request in connection with the
Closing, or as a basis for the Closing opinions, all in form and
substance satisfactory to each of the Investors.
5. Adjustment Upon Changes in Capitalization. In the
event of any change in the Company's common stock prior to the
Closing by reason of stock dividends, split-ups,
recapitalizations, combinations, exchanges of shares or the like,
the number of Units and the purchase price per Units provided for
hereunder shall be adjusted proportionately.
6. Investor Covenants. Each of the Investors covenants
severally but not jointly that:
6.1 Press Release. The Investor shall not issue any press
relating to the sale and acquisition of the Units and related
matters contemplated hereby without the prior approval of the
Company.
6.2 Confidentiality. The Investor acknowledges and agrees
that any information or data he has acquired from the Company,
9
not otherwise properly in the public domain, was received in
confidence. The Investor agrees (and agrees to cause his
officers, employees, agents, representatives and directors) not
to, without the Company's consent, divulge, communicate or
disclose any confidential information they have obtained prior to
the date hereof with respect to the Company, except as may be
required by law, or as may be necessary to disclose to its
attorneys, accountants and other advisors (but only to the extent
such individuals agree to be bound by the confidentiality
provisions hereof). The Investor's obligation under this Section
6.2 shall cease as to any information or data which after its
acquisition from the Company became or becomes generally
available to the public otherwise than as a result of a
disclosure by the Investor or anyone to whom he, directly or
indirectly, transmits such information or data in violation of
this Section 6.2.
7. Registration Rights. The Investors shall have the
registration rights with respect to the Shares and the shares of
Common Stock issuable upon exercise of the Warrants (the "Warrant
Shares") set forth in Exhibit C hereto.
The Company acknowledges that the Investors have made demand
for the registration of all of the Shares and the Warrant Shares
under and in accordance with the provisions of the Securities Act
(as defined in said Exhibit). The Company will file the Demand
Registration (as defined in said Exhibit) within 60 calendar days
after the Closing.
8. Miscellaneous.
8.1 Amendments. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
8.2 Termination. This Agreement will terminate
automatically and be of no further force or effect, and none of
the parties hereto will have any further obligations in respect
hereof, on September 30, 1995, if the purchase of Units pursuant
hereto shall not have taken place on or prior to that date. This
Agreement may also be terminated by mutual consent of the parties
hereto or by either party if the other party breaches this
Agreement.
8.3 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly received if so
given) by hand delivery, by cable, telegraph or telex, Federal
Express or other recognized overnight courier by mail (registered
or certified mail, postage prepaid, return receipt requested) or
by facsimile transmission to the respective parties as follows:
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If to Investors, to: Each of the addresses set forth on
Exhibit A hereto.
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
If to the Company, to:
Pharmos Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notices
of change of address shall only be effective upon receipt.
8.4 Survival of Representations and Warranties. All
representations and warranties contained herein or made in
writing by the Company or the Investors in connection herewith
shall survive the execution and delivery of this Agreement, the
sale and purchase of the Units and any disposition thereof,
regardless of any investigation made by or on behalf of the
Investors or the Company, as the case may be.
8.5 Indemnification. Each of the Company on the one hand
and the Investors on the other hand agrees to indemnify and to
hold the other harmless against and in respect of any and all
losses, damages, costs and expenses, including, without
limitation, reasonable attorneys' fees, as incurred by the
indemnified party, by reasons of a breach of any of the express
representations, warranties or covenants and agreements of the
other made in this Agreement, or otherwise on account of the
transactions contemplated herein except that each Investor shall
only be liable to the Company for breaches of representations and
warranties with respect to itself only.
8.6 Financial Advisor. The parties hereto acknowledge that
[one of the two finders] acts as financial advisor to the Company
for which services it is compensated.
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8.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive law of the State of
New York without giving effect to the principles of conflict of
laws thereof.
8.8 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original, but all
of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed on the day and year first above written.
PHARMOS CORPORATION
By: /s/ S. ▇▇▇▇▇ ▇▇▇▇▇
______________________________
S. ▇▇▇▇▇ ▇▇▇▇▇
INVESTORS:
/s/ INVESTORS
______________________________
Name (Print):
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EXHIBIT A
TO UNIT
PURCHASE AGREEMENT
Investors
_________
No. Shares No. of
Name, Address, Held Prior Units
Fax No. and Tax ID No. to Closing Purchased
______________________ __________ _________
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EXHIBIT B
TO UNIT
PURCHASE AGREEMENT
Form of Warrant Agreement
_________________________
WARRANT AGREEMENT dated as of September 14, 1995 between
PHARMOS CORPORATION, a Nevada corporation (the "Company"), and
[one of the two finders] (the "Investor Rep"), on behalf of the
persons whose names and addresses are set forth on annexed hereto
(the "Holders").
W I T N E S S E T H:
_ _ _ _ _ _ _ _ _ _
WHEREAS, pursuant to the terms of the Unit Purchase
Agreement dated as of September 14, 1995 between the Company and
the Holders (the "Unit Purchase Agreement"), the Holders shall be
issued an aggregate of [450,000, allocated 240,000 and 210,000 to
the two finders' investors] four-year warrants to purchase
[240,000 or 210,000] shares of Common Stock of the Company
("Common Stock") at an exercise price of $1.80 per share.
NOW, THEREFORE, in consideration of the premises herein set
forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Issue. The Company hereby issues to each Holder a
certificate (the "Warrant Certificate") dated as of the date
hereof providing each such Holder with the right to purchase, at
any time after the first anniversary date of the date hereof
until 5:30 p.m., New York time, on the fifth anniversary of the
date hereof, that number of shares of Common Stock set forth
opposite his or her name on Exhibit I (the "Warrant Shares")
(subject to adjustment as provided in Section 8 hereof) at an
initial exercise price (subject to adjustment as provided in
Section 8 hereof) equal to $1.80 per share. Except as set forth
herein, the Warrant Shares issuable upon exercise of the Warrants
are in all respects identical to the shares of Common Stock to be
issued in connection with the purchase of Units under the Unit
Purchase Agreement.
2. Warrant Certificates. The Warrant Certificates to be
delivered pursuant to this Agreement shall be in the form set
forth in Exhibit X, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Agreement.
14
3. Exercise of Warrant. The Warrants, when initially
exercisable, are exercisable at an aggregate initial exercise
price per share set forth in Section 6 hereof payable by
certified check or official bank check in New York Clearing House
funds. Upon surrender of a Warrant Certificate with the annexed
Form of Election to Purchase duly executed, together with payment
of the Exercise Price (as hereinafter defined) for the Warrant
Shares purchased, at the Company's principal offices in New York
(presently located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
10022) the registered holder of a Warrant Certificate
(individually a "Holder" and sometimes collectively the
"Holders") shall be entitled to receive a certificate or
certificates for the Warrant Shares so purchased. The purchase
rights represented by each Warrant Certificate are exercisable at
the option of the Holder thereof, in whole or in part (but not as
to fractional shares of the Common Stock underlying the
Warrants). In the case of the purchase of less than all the
Warrant Shares purchasable under any Warrant Certificate, the
Company shall cancel said Warrant Certificate upon the surrender
thereof and shall execute and deliver a new Warrant Certificate
of like tenor for the balance of the Warrant Shares purchasable
thereunder.
4. Issuance of Certificates. Upon the exercise of the
Warrants, the issuance of certificates for Warrant Shares or
other securities, properties or rights underlying such Warrants
shall be made forthwith (and in any event within five (5)
business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificates shall
(subject to the provisions of Sections 5 and 7 hereof) be issued
in the name of, or in such names as may be directed by, the
Holder thereof; provided, however, 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 such
certificates in a name other than that of the Holder and the
Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
The Warrant Certificates and the certificates representing
the Warrant Shares (and/or other securities, property or rights
issuable upon exercise of the Warrants) shall be executed on
behalf of the Company by the manual or facsimile signature of the
then present Chairman or Vice Chairman of the Board of Directors
or President or any Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the then present Secretary or any
Assistant Secretary of the Company. Warrant Certificates shall
be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
15
5. Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that
the Warrants are being acquired as an investment and not with a
view to the distribution thereof. The Warrants may be sold,
transferred, assigned, hypothecated or otherwise disposed of, in
whole or in part, without restriction, subject to compliance with
applicable securities laws.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. Except as
otherwise provided in Section 8 hereof, the initial exercise
price of each Warrant shall be the price set forth in Section 1
hereof per Warrant Share issued thereunder. The adjusted
exercise price shall be the price which shall result from time to
time from any and all adjustments of the initial exercise price
in accordance with the provisions of Section 8 hereof.
6.2 Exercise Price. The term "Exercise Price" herein
shall mean the initial exercise price or the adjusted exercise
price, depending upon the context.
7. Registration Rights.
7.1 Registration Under the Securities Act of 1933. The
Warrants, the Warrant Shares and any of the other securities
issuable upon exercise of the Warrants have not been registered
under the Securities Act of 1933, as amended (the "Act"). Upon
exercise, in whole or in part, of the Warrants, certificates
representing the Warrant Shares underlying the Warrants, and any
of the other securities issuable upon exercise of the Warrants
(collectively, the "Warrant Securities") shall bear the following
legend unless such Warrant Shares previously have been registered
under the Act in accordance with the terms hereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, RULE 144
UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
7.2 Registration. The Company acknowledges that in
connection with the Unit Purchase Agreement, it has granted to
the Holders certain registration rights with respect to the
Warrant Shares. The Company hereby covenants and agrees that any
16
Holder of the Warrants and the Warrant Shares has all of the
rights, and is subject to all of the obligations, set forth in
the registration provisions in Section 7 and Exhibit D of the
Unit Purchase Agreement with respect to the registration of the
Warrant Shares.
8. Adjustments to Exercise Price and Number of Securities.
8.1 Subdivision and Combination. In case the Company shall
at any time subdivide or combine the outstanding shares of Common
Stock, the Exercise Price shall forthwith be proportionately
decreased in the case of subdivision or increased in the case of
combination.
8.2 Adjustment in Number of Securities. Upon each
adjustment of the Exercise Price pursuant to the provisions of
this Section 8, the number of Warrant Shares issuable upon the
exercise of each Warrant shall be adjusted to the nearest full
amount by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of the Warrants immediately
prior to such adjustment and dividing the product so obtained by
the adjusted Exercise Price.
8.3 Merger or Consolidation. In case of any consolidation
of the Company with, or merger of the Company with, or merger of
the Company into, another corporation (other than a consolidation
or merger which does not result in any reclassification or change
of the outstanding Common Stock), the corporation formed by such
consolidation or merger shall execute and deliver to the Holder a
supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the
right thereafter (until the expiration of such Warrant) to
receive, upon exercise of such Warrant, the kind and amount of
shares of stock and other securities and property receivable upon
such consolidation or merger, 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 or transfer. Such supplemental warrant agreement shall
provide for adjustments which shall be identical to the
adjustments provided in this Section 8. The above provision of
this subsection shall similarly apply to successive
consolidations or mergers.
8.4 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the
shares of Common Stock issuable upon the exercise of the
Warrants.
17
(b) If the amount of said adjustment shall be less
than two cents (2 ) per Warrant Share, provided, however,
that in such case any adjustment that would otherwise be
required then to be made shall be carried forward and shall
be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried
forward, shall amount to at least two cents (2 ) per Warrant
Share.
(c) Upon the issuance or sale of Common Stock or
warrants, options or convertible securities, to be issued
and/or sold to employees, advisors, directors or officers
of, or consultants to, the Company or any of its
subsidiaries pursuant to a stock grant, stock option plan,
stock purchase plan, pension or profit sharing plan or other
stock agreement or arrangement currently existing or
approved by the Company's Board of Directors.
(d) Upon the issuance of shares of Common Stock,
warrants, options and convertible securities pursuant to
warrants, options and convertible securities outstanding as
of the date hereof.
(e) Upon the issuance of shares of Common Stock,
warrants, options and convertible securities in connection
with strategic partnerships or other business and/or product
consolidations or joint ventures.
9. Exchange and Replacement of Warrant Certificates. Each
Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holder at the principal
executive office of the Company, for a new Warrant Certificate of
like tenor and date representing in the aggregate the right to
purchase the same number of Shares in such denominations as shall
be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation
of any Warrant Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to
it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the
Warrants, if mutilated, the Company will make and deliver a new
Warrant Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall
not be required to issue certificates representing fractions of
shares of Common Stock upon the exercise of the Warrants, nor
shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent of the parties that all
fractional interests shall be eliminated by rounding any fraction
18
up to the nearest whole number of shares of Common Stock or other
securities, properties or rights.
11. Reservation and Listing of Securities. The Company
shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of
issuance upon the exercise of the Warrants, such number of shares
of Common Stock or other securities, properties or rights as
shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Warrants and
payment of the Exercise Price therefor, all shares of Common
Stock and other securities issuable upon such exercise shall be
duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any stockholder. As long as
the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon the
exercise of the Warrants to be listed (subject to official notice
of issuance) on all securities exchanges on which the Common
Stock may then be listed and/or quoted on NASDAQ.
12. Notices to Warrant Holders. Nothing contained in this
Agreement shall be construed as conferring upon the Holders by
virtue of their holding the Warrant the right to vote or to
consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any
other matter, or as having any rights whatsoever as a stockholder
of the Company. If, however, at any time prior to the expiration
of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders of
its shares of Common Stock for the purpose of entitling them
to receive a dividend or distribution payable otherwise than
in cash, or a cash dividend or distribution payable
otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or
distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the
Company or securities convertible into or exchangeable for
shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its
property, assets and business as an entirety shall be
proposed;
then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) days prior to
19
the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled
to such dividend, distribution, convertible or exchangeable
securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale or any such
earlier date that notice of such event is given to stockholders
of the Company. Such notice shall specify such record date or
the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the
declaration or payment of any such dividend, or the issuance of
any convertible or exchangeable securities, or subscription
rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. Notices.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been
duly made and sent when delivered, or mailed by registered or
certified mail, return receipt requested:
(a) If to the registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company;
or
(b) If to the Company, to the address set forth in
Section 3 hereof or to such other address as the Company may
designate by notice to the Holders.
14. Supplements and Amendments. The Company and the
Investor Rep may from time to time supplement or amend this
Agreement in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective
or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder
which the Company and the Investor Rep may deem necessary or
desirable and which the Company and the Investor Rep deem shall
not adversely affect the interests of the Holders of Warrant
Certificates.
15. Successors. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the
Company, the Holders and their respective successors and assigns
hereunder.
16. Termination. This Agreement shall terminate at the
close of business on the fifth anniversary of the issuance of the
Warrants.
17. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract
20
made under the laws of the State of New York and for all purposes
shall be construed in accordance with the laws of the State of
New York without giving effect to the rules of the State of New
York governing the conflicts of laws.
18. Entire Agreement; Modification. This Agreement
(including the Unit Purchase Agreement, to the extent portions
thereof are referred to herein) contains the entire understanding
between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing
duly signed by the party against whom enforcement of the
modification or amendment is sought.
19. Severability. If any provision of this Agreement shall
be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision of this
Agreement.
20. Captions. The caption headings of the Sections of this
Agreement are for convenience of reference only and are not
intended, nor should they be construed as, a part of this
Agreement and shall be given no substantive effect.
21. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other
than the Company and the Investor Rep and any other registered
Holder(s) of the Warrant Certificates or Warrant Securities any
legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole and exclusive benefit of
the Company, the Investor Rep and any other Holder(s) of the
Warrant Certificates or Warrant Securities.
22. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and such counterparts
shall together constitute but one and the same instrument.
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
PHARMOS CORPORATION
By:______________________________
Name:
Title:
_________________________________
[Investor Rep], on behalf of the
persons whose names and addresses
are set forth on Exhibit I annexed
hereto
22
EXHIBIT I
TO
WARRANT AGREEMENT
Holders
_______
Name, Address No. of Warrant Shares
_____________ _____________________
EXHIBIT X
TO
WARRANT AGREEMENT
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") (ii) TO
THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR
RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM
REGISTRATION UNDER THE ACT IS AVAILABLE.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, _____________, 1996 [1st Anniversary of
Closing Date]
No. W-95A-1 _______ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ________________
[Name of holder ] or his registered assigns, is the registered
holder of _______ Warrants to purchase initially, at any time
from ___________, 1996 [1st Anniversary of Closing Date] until
5:30 p.m. New York time on ____________, 2000 [5th anniversary
date] ("Expiration Date"), up to _______ fully-paid and non-
assessable shares of common stock, par value $.03 per share
("Common Stock") of PHARMOS CORPORATION, a Nevada corporation
(the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), equal to
$1.80 per share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in
the Warrant Agreement dated as of __________, 1995 [Closing Date]
between the Company and _______ _________, on behalf of the
persons whose names and addresses are set forth on Exhibit I
annexed thereto (the "Warrant Agreement"). Payment of the
Exercise Price shall be made by certified check or official bank
check in New York Clearing House funds payable to the order of
the Company.
No Warrant may be exercised after 5:30 p.m., New York
time, on the Expiration Date, at which time all Warrants
evidenced hereby, unless exercised prior thereto, shall
thereafter be void.
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants issued pursuant to
the Warrant Agreement, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument
and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities
thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of
the Warrants.
The Warrant Agreement provides that upon the occurrence
of certain events the Exercise Price and the type and/or number
of the Company's securities issuable thereupon may, subject to
certain conditions, be adjusted. In such event, the Company
will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and
the number and/or type of securities issuable upon the exercise
of the Warrants; provided, however, that the failure of the
Company to issue such new Warrant Certificates shall not in any
way change, alter, or otherwise impair, the rights of the holder
as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of
this Warrant Certificate at an office or agency of the Company, a
new Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be
issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in
the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such
transfer.
Upon the exercise of less than all of the Warrants
evidenced by this Certificate, the Company shall forthwith issue
to the holder hereof a new Warrant Certificate representing such
number of unexercised Warrants.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any
notice to the contrary.
All terms used in this Warrant Certificate which are
defined in the Warrant Agreement shall have the meanings assigned
to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed.
Dated as of September __, 1995.
PHARMOS CORPORATION
By: ______________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Acting Secretary and
Chief Financial Officer
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise
the right, represented by this Warrant Certificate, to purchase
shares of Common Stock and herewith tenders in payment for such
securities a certified check or official bank check payable in
New York Clearing House Funds to the order of PHARMOS
CORPORATION in the amount of $_____, all in accordance with the
terms of Section 3 of the Warrant Agreement dated as of
___________, 1995 between Pharmos Corporation an
_________________, on behalf of the persons whose names and
addresses are set forth on Exhibit I annexed thereto. The
undersigned requests that a certificate for such securities be
registered in the name of whose address is ______________________
and that such Certificate be delivered to _______________________
whose address is ________________________________________.
Dated: ______________ Signature __________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
__________________________________
(Insert Social Security or Other
Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ______________________ hereby sells,
assigns and transfers unto
________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint _______________ Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full
power of substitution.
Dated: ______________ Signature: ________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant Certificate.)
_________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
EXHIBIT C
TO UNIT
PURCHASE AGREEMENT
Registration Rights
___________________
1. Certain Definitions. As used in this Exhibit C, the
following terms shall have the following meanings, with terms
not otherwise defined herein having the same meaning as set
forth in the Unit Purchase Agreement dated as of September 14,
1995 (the "Agreement") to which this Exhibit C is appended and
constitutes a part.
(a) "Holder" shall mean any holder of Shares.
(b) The terms "Register", "Registered" and "Registra-
tion" refer to a registration effected by preparing and
filing a registration statement in compliance with the
Securities Act of 1933, as amended ("Registration
Statement"), and the declaration or ordering of the
effectiveness of such Registration Statement.
(c) "Registration Expenses" shall mean all expenses
incurred by Pharmos in complying with this Exhibit C,
including, without limitation, all federal and state
registration, qualification and filing fees, printing
expenses, fees and disbursements of counsel for the
Company, Blue Sky fees and expenses, and the expense of any
special audits incident to or required by any such
Registration.
(d) "Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of
Shares pursuant to a Registration and all fees and
disbursements of counsel for any Holder.
(e) "Shares" shall mean all shares of Common Stock of
the Company sold in connection with the sale of Units
pursuant to the Agreement.
(f) "Warrant Shares" shall mean all shares of Common
Stock issuable upon exercise of the Warrants included in
the Units pursuant to the Agreement.
2. Shelf Registrations.
(a) Shelf Registration of Shares and Warrant Shares.
The Company shall file, within 60 days following the
Closing under the Agreement, and use its best efforts to
cause to be declared effective, a "shelf" registration
statement on any form appropriate pursuant to Rule 415 (or
any similar rule then in effect) under the Securities Act
of 1933, as amended (the "1933 Act"), registering the
resale by the holders thereof of all of the Shares and the
Warrant Shares.
(b) Number of Shelf Registrations; Effective Period.
The Holders of the Shares and Warrant Shares will be
entitled to one Registration for the Shares and the Warrant
Shares and the Company will pay all Registration Expenses.
The Company hereby represents and warrants that it is
currently eligible to use Form S-3 to effect the Regis-
tration referred to in this Exhibit C and covenants and
agrees timely to file all reports required under the 1934
Act prior to the filing of the Registration Statement and
to use its best efforts to remain eligible to use Form S-3
and to keep the Registration Statement effective until
three years following the effectiveness of the Registration
Statement. The Registration shall not involve an
underwritten offering.
3. Blue Sky. The Company will exercise its best efforts
to register and qualify the Shares and Warrant Shares included
in the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders for the distribution of such
securities; provided, however, that the Company shall not be
required to qualify to do business, to file a general consent to
service of process, or to subject itself to taxation in any
state or jurisdiction in which it is not now so qualified or
taxed.
4. Expenses of Registration. All Registration Expenses
incurred in connection with the Registration Statement shall be
borne by the Company. All Selling Expenses shall be borne by
the Holders of the Shares and Warrant Shares on the basis of the
number of shares sold by them.
5. Registration Procedures.
(a) Advice by the Company. The Company will keep
each Holder whose Shares and Warrant Shares are included in
the Registration Statement advised as to the initiation and
completion of such Registration. At its expense the
Company will (i) furnish such number of prospectuses
(including preliminary prospectuses) and other documents as
any such Holder from time to time may reasonably request;
and (ii) furnish to each of the Holders, upon the
effectiveness of the Registration Statement and upon each
change in facts set forth in such memorandum, a memorandum
of counsel advising as to the status of its registration
and qualification of its Shares and Warrant Shares under
the securities or Blue Sky laws of those jurisdictions
reasonably requested by the Holders pursuant to Section 3.
In addition, the obligation of the Company to maintain the
effectiveness of any Registration Statement shall be
suspended with respect to any Shares or Warrant Shares held
by a Holder at any time following the sale of such Shares
or Warrant Shares pursuant to Rule 144(k) or through the
Registration Statement, or if the legend(s) referred to in
Section 1.4 of the Agreement are otherwise removed with the
consent of the Company's counsel.
(b) Amendments. The Company will promptly prepare
and file with the SEC such amendments and prospectus
supplements, including post-effective amendments, to the
Registration Statement as the Company determines may be
necessary or appropriate, and use its best efforts to have
such post-effective amendments declared effective as
promptly as practicable; cause the related prospectus to be
supplemented by any prospectus supplement, and as so
supplemented, to be filed with the SEC; and notify the
Holders of any Shares or Warrant Shares included in such
Registration Statement and the underwriter thereof, if any,
promptly when a prospectus, any prospectus supplement or
post-effective amendment must be filed (because the
Registration Statement has become inaccurate or otherwise)
or has been filed and, with respect to any post-effective
amendment, when the same has become effective.
6. Information Furnished by Holder. It shall be a
condition precedent to the Company's obligations to register the
Shares and Warrant Shares held by each individual Holder
hereunder that such Holder furnish to the Company in writing
such information regarding such Holder and the distribution
proposed by such Holder as the Company may reasonably request.
7. Indemnification.
(a) The Company's Indemnification. The Company will
indemnify each Holder, each of its officers, directors and
constituent partners, and each person controlling such
Holder, with respect to which Registration, qualification
or compliance has been effected pursuant hereto, against
all claims, losses, damages or liabilities (or actions in
respect thereof) to the extent such claims, losses, damages
or liabilities arise out of or are based upon any untrue
statement (or alleged untrue statement) of a material fact
contained in any prospectus or any related Registration
Statement incident to any such Registration, qualification
or compliance, or any omission (or alleged omission) to
state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,
or any violation by the Company of any rule or regulation
promulgated under the 1933 Act applicable to the Company
and relating to action or inaction required of the Company
in connection with any such Registration; and the Company
will reimburse each such Holder, and each person who
controls any such Holder, for any legal and any other
expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage,
liability or action; provided, however, that the indemnity
contained in this Section 7(a) shall not apply to amounts
paid in settlement of any such claim, loss, damage,
liability or action if settlement is effected without the
consent of the Company (which consent shall not
unreasonably be withheld and may not be withheld unless the
Company has acknowledged in writing the Holder's right to
indemnity under such claim); and provided, further, that
the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or
expense arises out of or is based upon any untrue statement
or omission based upon written information furnished to the
Company by such Holder, or controlling person and stated in
writing to be for use in connection with the offering of
securities of the Company. Notwithstanding the above, the
foregoing indemnity is subject to the condition that,
insofar as it relates to any such untrue statement, alleged
untrue statement, omission or alleged omission made in a
preliminary prospectus on file with the SEC at the time the
Registration Statement becomes effective or a prospectus
filed with the SEC pursuant to Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to
the benefit of any Holder, if a copy of the Final
Prospectus was not furnished to the person asserting the
loss, liability, claim or damage at or prior to the time
such action is required by the 1933 Act and if the Final
Prospectus corrected the untrue statement or omission or
alleged untrue statement or omission.
(b) Holder's Indemnification. Each Holder will, if
Shares or Warrant Shares held by such Holder are included
in the Registration Statement being effected pursuant
hereto, indemnify the Company, each of its directors and
officers, each person who controls the Company within the
meaning of the 1933 Act, and each other such Holder, each
of its officers, directors and constituent partners and
each person controlling such other Holder, against all
claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based upon (i) any
untrue statement (or alleged untrue statement) of a
material fact contained in such Registration Statement or
related prospectus, or any omission (or alleged omission)
to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or (ii) the failure by the Holder to deliver a
Final Prospectus to any person as required by any rule or
regulation promulgated under the 1933 Act, and will
reimburse the Company, such other Holders, such directors,
officers, partners, persons, underwriters or control
persons for any legal and any other expenses reasonably
incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case
to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or
alleged omission) is made in the Registration Statement or
prospectus in reliance upon and in conformity with written
information furnished to the Company by such Holder and
stated to be specifically for use in connection with the
offering of the Company; provided, however, that each
Holder's liability under this Section 7(b) shall not exceed
such Holder's proceeds from the offering of his Shares
and\or Warrant Shares made in connection with such
Registration.
(c) Indemnification Procedure. Promptly after
receipt by an indemnified party under this Section 7 of
notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 7, notify
the indemnifying party in writing of the commencement
thereof and generally summarize such action. The
indemnifying party shall have the right to participate in
and to assume the defense of such claim, and shall be
entitled to select counsel for the defense of such claim
with the approval of any parties entitled to
indemnification, which approval shall not be unreasonably
withheld. Notwithstanding the foregoing, the parties
entitled to indemnification shall have the right to employ
separate counsel (reasonably satisfactory to the
indemnifying party) to participate in the defense thereof,
but the fees and expenses of such counsel shall be the
expense of such indemnified parties unless the named
parties to such action or proceedings include both the
indemnifying party and the indemnified parties and the
indemnifying party or such indemnified parties shall have
been advised by counsel that there are one or more legal
defenses available to it which are different from or
additional to those available to the indemnifying party (in
which case, if the indemnified party notifies the
indemnifying party in writing that it elects to employ
separate counsel at the reasonable expense of the
indemnifying party, the indemnifying party shall not have
the right to assume the defense of such action or
proceeding on behalf of the indemnified party, as the case
may be, it being understood, however, that the indemnifying
party shall not, in connection with any such action or
proceeding or separate or substantially similar or related
action or proceeding in the same jurisdiction arising out
of the same general allegations or circumstances, be liable
for the reasonable fees and expenses of more than one
separate counsel at any time for the indemnifying party and
all indemnified parties, which counsel shall be designated
in writing by the Holders of a majority of the Shares and
Warrant Shares).
(d) Contribution. If the indemnification provided
for in this Section 7 from an indemnifying party is
unavailable to an indemnified party hereunder in respect to
any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect
the relative fault of the indemnifying party and
indemnified party in connection with the statements or
omissions which result in such losses, claims, damages,
liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact
relates to information supplied by such indemnifying party
or indemnified party and the parties' relative intent,
knowledge, access to information supplied by such
indemnifying party or indemnified party and opportunity to
correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above
shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection
with investigating or defending any action, suit,
proceeding or claim. Notwithstanding the foregoing each
Holder's liability for contribution under this Section 7(d)
shall not exceed such Holder's proceeds from the offering
of his Shares and/or Warrant Shares made in connection with
any Registration.
8. No-Action Letter or Opinion of Counsel in Lieu of
Registration. Notwithstanding anything else herein, if the
Company shall have obtained from the SEC a "no-action" letter in
which the SEC has indicated that it will take no action if,
without Registration under the 1933 Act, any Holder disposes of
Shares or Warrant Shares covered by any request for Registration
made under this Exhibit C in the specific manner in which such
Holder proposes to dispose of the Shares or Warrant Shares
included in such request (such as including, without limitation,
inclusion of such Shares or Warrant Shares in an underwriting
initiated by either the Company or the Holders), or if in the
opinion of counsel for the Company concurred in by counsel for
such Holder, which concurrence shall not be unreasonably
withheld, no Registration under the 1933 Act is required in
connection with such disposition, due to the applicability of
Rule 144(k) as promulgated under the 1933 Act (or any successor
provision), the Shares or Warrant Shares included in such
request shall not be eligible for Registration under this
Agreement; provided, however, that any Shares or Warrant Shares
not so disposed of shall be eligible for Registration in
accordance with the terms hereof with respect to other proposed
dispositions to which this Section 8 does not apply. In
addition, the obligation of the Company to file or maintain the
effectiveness of any Registration Statement shall be suspended
with respect to any Shares held by a Holder following such time.