AEOLUS PHARMACEUTICALS, INC. WARRANT TO PURCHASE FOUR MILLION SHARES OF COMMON STOCK
Exhibit
10.4
NEITHER
THIS WARRANT NOR THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.
SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED EXCEPT
(1) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR
(2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, AND, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS
OF THE
STATES AND OTHER JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM
REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER
THE
SECURITIES ACT AND SUCH OTHER APPLICABLE LAWS.
WARRANT
TO PURCHASE FOUR MILLION SHARES OF COMMON STOCK
| June 5, 2006 |
Warrant
No.
CO-91
|
For
value
received, Aeolus Pharmaceuticals, Inc., a Delaware corporation (the
“Company”),
hereby certifies that EFFICACY
BIOTECH MASTER FUND LTD.,
or
its registered
transferees, successors or assigns (each person or entity holding all or
part of
this Warrant being referred to as a “Holder”),
is
the registered holder of a warrant (the “Warrant”)
to
subscribe for and purchase Four
Million
(4,000,000)
shares
(as adjusted pursuant to Section
3
hereof,
the “Warrant
Shares”)
of the
fully paid and nonassessable common stock, par value $0.01 per share, of
the
Company (the “Common
Stock”),
at a
purchase price per share initially equal to Fifty Cents ($0.50) (the
“Warrant
Price”),
on or
before 5:00 P.M., Eastern Time, on June 5, 2007 (the “Expiration
Date”),
subject to the provisions and upon the terms and conditions hereinafter set
forth. As used in this Warrant, the term “Business
Day”
means
any day other than a Saturday or Sunday on which commercial banks located
in New
York, New York are open for the general transaction of business.
This
Warrant is one of a number of Warrants (collectively, the “Warrants”)
being
issued pursuant that certain Subscription Agreement dated as of June 5, 2006,
by
and among the Company and the Investors party thereto (the “Subscription
Agreement”).
Section
1. Method
of Exercise; Payment; Issuance of New Warrant.
(a) Subject
to the provisions hereof, the Holder may exercise this Warrant, in whole
or in
part and from time to time, by the surrender of this Warrant (with the Notice
of
Exercise attached hereto as Appendix
A
duly
executed) at the principal office of the Company, or such other office or
agency
of the Company as it may reasonably designate by written notice to the Holder,
during normal business hours on any Business Day, and the payment by the
Holder
by cash, certified check payable to the Company or wire transfer of immediately
available funds to an account designated to the exercising Holder by the
Company
of an amount equal to the then applicable Warrant Price multiplied by the
number
of Warrant Shares then being purchased. On the date on which the Holder shall
have satisfied in full the Holder’s obligations set forth herein regarding an
exercise of this Warrant (provided such date is no later than the Expiration
Date), the Holder (or such other person or persons as directed by the Holder,
subject to compliance with applicable securities laws) shall be treated for
all
purposes as the holder of record of such Warrant Shares as of the close of
business on such date.
(b) In
the
event of any exercise of the rights represented by this Warrant, certificates
for the whole number of shares of Common Stock so purchased shall be delivered
to the Holder (or such other person or persons as directed by the Holder,
subject to compliance with applicable securities laws) as promptly as is
reasonably practicable (but not later than three
(3) Business
Days)
after
such exercise at the Company’s expense, and, unless this Warrant has been fully
exercised, a new Warrant representing the whole number of Warrant Shares,
if
any, with respect to which this Warrant shall not then have been exercised
shall
also be issued to the Holder as soon as reasonably practicable thereafter
(but
not later than three
(3) Business
Days)
after
such exercise.
(c) Certificates
for Warrant Shares purchased hereunder shall be transmitted by the Company
or
its transfer agent to the Holder by crediting the account of the Holder’s prime
broker with the Depository Trust Company through its Deposit Withdrawal Agent
Commission (“DWAC”)
system
if the Company is a participant in such system, and otherwise by physical
delivery to the address specified by the Holder in the Notice of Exercise
within
three (3) Business Days from the delivery to the Company of each of the Notice
of Exercise, payment of the Warrant Price multiplied by the number of Warrant
Shares being purchased (the “Purchase
Price”)
and
surrender of this Warrant (“Warrant
Share Delivery Date”).
This
Warrant shall be deemed to have been exercised on the latest date on which
the
Notice of Exercise, this Warrant or the applicable Purchase Price is received
by
the Company (the latest date being the “Receipt
Date”).
The
Warrant Shares shall be deemed to have been issued, and Holder or any other
person so designated to be named therein shall be deemed to have become a
holder
of record of such shares for all purposes, as of the later of the Receipt
Date
and the date that all taxes required to be paid by the Holder, if any, prior
to
the issuance of such Warrant Shares have been paid.
(d) If
this
Warrant shall have been exercised in part, the Company shall at the time
of
delivery of the certificate or certificates representing Warrant Shares,
deliver
to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant
shall
in all other respects be identical with this Warrant.
(e) If
the
Company or its transfer agent fails to transmit to the Holder a certificate
or
certificates representing the Warrant Shares pursuant to Section
1(c)
hereof
by the Warrant Share Delivery Date, then the Holder will have the right to
rescind such exercise by delivering a written notice of rescission to the
Company within three (3) Business Days of the Warrant Share Delivery Date.
The
Company shall be liable to the Holder for liquidated damages in an amount
equal
to 1.5% of the aggregate price of the Warrant Shares, as adjusted pursuant
to
Section
3
hereof,
evidenced by such certificate for each thirty (30)-day period (or portion
thereof) beyond such three (3)-Business Day period that the certificates
have
not been so delivered.
-2-
(f) If
any
portion of this Warrant remains unexercised as of the Expiration Date and
the
Fair Market Value (as
defined in Section
9
hereof)
of
one
share of Common Stock as of the Expiration Date is greater than the applicable
Warrant Price as of the Expiration Date, then this Warrant shall be deemed
to
have been automatically exercised as of immediately prior to the close of
business on the Expiration Date (or in the event that the Expiration Date
is not
a Business Day, the immediately preceding Business Day) (the “Automatic
Exercise Date”);
provided
that
the
Holder submits to the Company no later than ten (10) Business Days following
the
Automatic Exercise Date payment (the “Payment”)
by
cash, certified check payable to the Company or wire transfer of immediately
available funds to an account designated to the exercising Holder by the
Company
of an amount equal to the Warrant Price applicable as of the Automatic Exercise
Date multiplied by the number of Warrant Shares then being purchased pursuant
to
this Section
1(f).
The
Holder (or such other person or persons as directed by the Holder, subject
to
compliance with applicable securities laws) shall be treated for all purposes
as
the holder of record of such Warrant Shares as of the close of business on
the
date the Payment is received by the Company. This Warrant shall be deemed
to be
surrendered to the Company on the Automatic Exercise Date by virtue of this
Section
1(f)
without
any action by the Holder; provided
that
the
Holder shall be required to surrender this Warrant to the Company with the
Payment. As soon as is reasonably practicable after the Payment and Warrant
are
received by the Company pursuant to this Section
1(f),
the
Company, at its expense, shall issue and deliver to the Holder (or such other
person or persons as directed by the Holder, subject to compliance with
applicable securities laws) a certificate or certificates for the number
of
Warrant Shares issuable upon such exercise in accordance with this Section
1(f).
Section
2. Reservation
of Shares; Stock Fully Paid; Listing.
The
Company shall keep reserved a sufficient number of shares of the authorized
and
unissued shares of Common Stock to provide for the exercise of the rights
of
purchase represented by this Warrant in compliance with its terms. All Warrant
Shares issued upon exercise of this Warrant shall be, at the time of delivery
of
the certificates for such Warrant Shares upon payment in full of the Warrant
Price therefor in accordance with the terms of this Warrant, duly authorized,
validly issued, fully paid and non-assessable shares of Common Stock. The
Company shall, prior to the Expiration Date when the shares of Common Stock
issuable upon the exercise of this Warrant are authorized for listing or
quotation on a national securities exchange, a Nasdaq quotation system, the
Over-the-Counter Bulletin Board or the “pink sheets”, as the case may be, use
commercially reasonable efforts to keep the shares of Common Stock issuable
upon
the exercise of this Warrant authorized for listing or quotation on such
national securities exchange, Nasdaq quotation system, the Over-the-Counter
Bulletin Board or the “pink sheets”, as the case may be.
Section
3. Adjustments
and Distributions.
The
number and kind of securities purchasable upon the exercise of this Warrant
and
the Warrant Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) If
the
Company shall at any time or from time to time while this Warrant is
outstanding, pay a dividend or make a distribution on its Common Stock in
shares
of Common Stock, subdivide its outstanding shares of Common Stock into a
greater
number of shares or combine its outstanding shares of Common Stock into a
smaller number of shares, then the number of Warrant Shares purchasable upon
exercise of this Warrant and the Warrant Price in effect immediately prior
to
the date upon which such change shall become effective shall be proportionally
adjusted by the Company so that the Holder thereafter exercising this Warrant
shall be entitled to receive the number of shares of Common Stock or other
capital stock which the Holder would have received if this Warrant had been
exercised immediately prior to such event upon payment of a Warrant Price
that
has been proportionally adjusted to reflect such event. Such adjustments
shall
be made successively whenever any event listed above shall occur.
-3-
(b) If
any
recapitalization, reclassification or reorganization of the capital stock
of the
Company (other than a change in par value or a subdivision or combination
as
provided for in Section
3(a)
above)
shall be effected in such a manner (including, without limitation, in connection
with a consolidation or merger in which the Company is the continuing
corporation), that holders of Common Stock shall be entitled to receive stock,
securities, or other assets or property (a “Reorganization”),
then,
as a condition of such Reorganization, lawful and adequate provisions shall
be
made by the Company whereby the Holder hereof shall thereafter have the right
to
purchase and receive (in lieu of the shares of the Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby) such shares of stock, securities or other assets
or
property as may be issued or payable in such Reorganization with respect
to or
in exchange for a number of outstanding shares of such Common Stock equal
to the
number of shares of such Common Stock purchasable and receivable immediately
prior to such Reorganization upon the exercise of this Warrant. In the event
of
any Reorganization, appropriate provision shall be made by the Company with
respect to the rights and interests of the Holder of this Warrant to the
end
that the provisions hereof (including, without limitation, provisions for
adjustments of the Warrant Price and of the number of Warrant Shares) shall
thereafter be applicable, in relation to any shares of stock, securities
or
assets thereafter deliverable upon the exercise hereof. The provisions of
this
Section
3(b)
shall
similarly apply to successive Reorganizations.
(c) If
any
consolidation or merger of the Company with another entity in which the Company
is not the survivor, or sale, transfer or other disposition of all or
substantially all of the Company’s assets to another entity shall be effected (a
“Change
in Control”),
then,
as a condition of such consolidation, merger, sale, transfer or other
disposition, lawful and adequate provision shall be made whereby the Holder
shall thereafter have the right to purchase and receive upon the basis and
upon
the terms and conditions herein specified and in lieu of the Warrant Shares
immediately theretofore issuable upon exercise of this Warrant, such shares
of
stock, securities or assets as would have been issuable or payable with respect
to or in exchange for a number of Warrant Shares equal to the number of Warrant
Shares immediately theretofore issuable upon exercise of this Warrant, had
such
consolidation, merger, sale, transfer or other disposition not taken place,
and
in any such case appropriate provision shall be made with respect to the
rights
and interests of the Holder to the end that the provisions hereof (including,
without limitation, provision for adjustment of the Warrant Price and of
the
number of Warrant Shares) shall thereafter be applicable, as nearly equivalent
as may be practicable, in relation to any shares of stock, securities or
properties thereafter deliverable upon the exercise thereof. The Company
shall
not effect any such consolidation, merger, sale, transfer or other disposition
unless prior to or simultaneously with the consummation thereof the successor
entity (if other than the Company) resulting from such consolidation or merger,
or the entity purchasing or otherwise acquiring such assets or other appropriate
entity shall assume the obligation to deliver to the Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such Holder may be entitled to purchase, and the other obligations under
this
Warrant. The provisions of this Section
3(c)
shall
similarly apply to successive consolidations, mergers, sales, transfers or
other
dispositions.
-4-
(d) In
case
the Company shall fix a payment date for the making of a distribution to
all
holders of Common Stock of evidences of indebtedness or assets (other than
dividends or distributions referred to in Section
3(a)
hereof),
or subscription rights or warrants, the Warrant Price to be in effect after
such
payment date shall be determined by multiplying the Warrant Price in effect
immediately prior to such payment date by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding multiplied
by
the Fair Market Value (as defined in Section
9
hereof)
per share of Common Stock immediately prior to such payment date, less the
fair
market value (as determined by the Company’s Board of Directors (the
“Board”)
in good
faith) of said assets or evidences of indebtedness so distributed, or of
such
subscription rights or warrants, and the denominator of which shall be the
total
number of shares of Common Stock outstanding multiplied by such Fair Market
Value per share of Common Stock immediately prior to such payment date. Such
adjustment shall be made successively whenever such a payment date is fixed.
In
the event that:
(i) any
dividend or distribution for which this Section
3(d)
would
require an adjustment is not so paid or made, the Warrant Price shall be
adjusted to be the Warrant Price which would then be in effect if such dividend
or distribution had not been declared; or
(ii) the
Company implements a new shareholder rights plan, such rights plan shall
provide
that upon exercise of this Warrant the Holder will receive, in addition to
the
Common Stock issuable upon such exercise, the rights issued under such rights
plan (as if the Holder had exercised this Warrant prior to implementing the
rights plan and notwithstanding the occurrence of an event causing such rights
to separate from the Common Stock at or prior to the time of exercise). Any
distribution of rights or warrants pursuant to a shareholder rights plan
complying with the requirements set forth in the immediately preceding sentence
of this paragraph shall not constitute a distribution of rights or warrants
for
the purposes of this Section
3(d).
(e) An
adjustment to the Warrant Price under the terms hereof shall become effective
immediately after the payment date, in the case of each dividend or
distribution, and immediately after the effective date of each other event
which
requires an adjustment. No adjustment to the Warrant Price shall be made
in an
amount less than $0.01, but any such lesser amount shall be carried forward
and
shall be given effect in the next Warrant Price adjustment, if any.
(f) In
the
event that, as a result of an adjustment made pursuant to this Section
3,
the
Holder shall become entitled to receive any shares of capital stock of the
Company other than shares of Common Stock, the number of such other shares
so
receivable upon exercise of this Warrant shall be subject thereafter to
adjustment from time to time in a manner and on terms as nearly equivalent
as
practicable to the provisions with respect to the Warrant Shares contained
in
this Warrant.
-5-
(g) With
each
adjustment pursuant to this Section
3,
the
Company shall deliver a certificate signed by its chief financial or executive
officer 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 Warrant Price and the number of Warrant Shares purchasable
hereunder after giving effect to such adjustment, which shall be mailed by
first
class mail, postage prepaid to the Holder.
(h) If
holders of Common Stock are given any choice as to the securities, cash or
property to be received in a Reorganization or a Change in Control, then
the
Holder shall be given the same choice as to the type and form of consideration
it receives upon any exercise of this Warrant following such Reorganization
or
Change in Control.
(i) The
Company may at any time during the term of this Warrant reduce the then current
Warrant Price to any amount and for any period of time deemed appropriate
by the
Board of Directors of the Company.
(j) If:
(A)
the Company shall declare a dividend (or any other distribution) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash dividend
on or
a redemption of the Common Stock; (C) the Company shall authorize the granting
to all holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Company shall be required in connection
with
any Reorganization or Change in Control whereby the Common Stock is converted
into other securities, cash or property; (E) the Company shall authorize
the voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Company; then, in each case, the Company shall cause to be
mailed
to the Holder at its last address as it shall appear upon the Company’s Warrant
register, at least twenty (20) calendar days prior to the applicable record
or
effective date hereinafter specified, a notice stating (x) the date on which
a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date
as
of which the holders of the Common Stock of record to be entitled to such
dividend, distribution, redemption, rights or warrants are to be determined,
or
(y) the date on which such Reorganization or Change in Control is expected
to
become effective or close, and the date as of which it is expected that holders
of the Common Stock of record shall be entitled to exchange their shares
of the
Common Stock for securities, cash or other property deliverable upon
consummation of such Reorganization or Change in Control; provided
that
the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. The Holder is entitled to exercise this Warrant during the
20-day period immediately following the date of such notice.
Section
4. Transfer
Taxes.
The
Company will pay any documentary stamp taxes attributable to the initial
issuance of Warrant Shares issuable upon the exercise of the Warrant;
provided
that
the
Company shall not be required to pay any tax or taxes which may be payable
in
respect of any transfer involved in the issuance or delivery of any certificates
for Warrant Shares in a name other than that of the registered Holder of
this
Warrant in respect of which such shares are issued, and in such case, the
Company shall not be required to issue or deliver any certificate for Warrant
Shares or any Warrant until the person requesting the same has paid to the
Company the amount of such tax or has established to the Company’s reasonable
satisfaction that such tax has been paid.
-6-
Section
5. Mutilated
or Missing Warrants.
In case
this Warrant shall be mutilated, lost, stolen, or destroyed, the Company
shall
issue in exchange and substitution of and upon cancellation of the mutilated
Warrant, or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and for the purchase of a like number
of
Warrant Shares, but only upon receipt of evidence reasonably satisfactory
to the
Company of such loss, theft or destruction of the Warrant, and with respect
to a
lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect
thereto, if requested by the Company.
Section
6. Fractional
Shares.
No
fractional shares of Common Stock shall be issued in connection with any
exercise hereunder, and in lieu of any such fractional shares the Company
shall
make a cash payment therefor to the Holder (or such other person or persons
as
directed by the Holder, subject to compliance with all applicable laws) based
on
the Fair Market Value of a share of Common Stock on the date of exercise
of this
Warrant.
Section
7. Compliance
with Securities Act and Legends. The
Holder, by acceptance hereof, agrees that it will not offer, sell or otherwise
dispose of this Warrant, or any shares of Common Stock to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder, as amended (the “Act”),
or
any state’s securities laws. All shares of Common Stock issued upon exercise of
this Warrant (unless registered under the Act) shall be stamped or imprinted
with a legend as follows:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE (i) NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE,
AND
(ii) BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY. THESE SECURITIES MAY NOT
BE
SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT OR LAWS.”
Section
8. Rights
as a Stockholder.
Except
as expressly provided in this Warrant, no Holder, as such, shall be entitled
to
vote or receive dividends or be deemed the holder of Common Stock or any
other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed
to
confer upon the Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of the directors or upon any
matter submitted to stockholders at any meeting thereof, or to receive notice
of
meetings, or to receive dividends or subscription rights or otherwise, until
this Warrant shall have been exercised and the Warrant Shares purchasable
upon
the exercise hereof shall have become deliverable, as provided
herein.
Section
9. The
“Fair
Market Value”
of
a
share of Common Stock as of a particular date (the “Valuation
Date”)
shall
mean the following:
(a) if
the
Common Stock is then listed on a national securities exchange, the average
of
the closing sale prices of one share of Common Stock on such exchange on
the ten
(10) consecutive trading days ending on the last trading day prior to the
Valuation Date; provided
that
if such
stock has not traded in the ten (10) consecutive trading days prior to the
Valuation Date, the Fair Market Value shall be the average of the closing
sale
prices of one share of Common Stock in the most recent ten (10) trading days
during which the Common Stock has traded prior to the Valuation
Date;
-7-
(b) if
the
Common Stock is then included in The Nasdaq Stock Market, Inc., including
without limitation the NASDAQ Capital
Market
or the NASDAQ National Market (“Nasdaq”),
the
average of the closing sale prices of one share of Common Stock on Nasdaq
on the
ten (10) consecutive trading days ending on the last trading day prior to
the
Valuation Date or, if no closing sale price is available for any of such
ten
(10) trading days, the closing sale price for such day shall be determined
as
the average of the high bid and the low ask price quoted on Nasdaq as of
the end
of such trading day; provided
that
if the
Common Stock has not traded in the ten (10) consecutive trading days prior
to
the Valuation Date, the Fair Market Value shall be the average of the closing
sale prices of one share of Common Stock in the most recent ten (10) trading
days during which the Common Stock has traded prior to the Valuation
Date;
(c) If
the
Common Stock is then included in the Over-the-Counter Bulletin Board, the
average of the closing sale prices of one share of Common Stock on the
Over-the-Counter Bulletin Board over the ten (10) consecutive trading days
ending on the last trading day prior to the Valuation Date or, if no closing
sale price is available for any of such ten (10) trading days, the closing
sale
price for such day shall be determined as the average of the high bid and
the
low ask price quoted on the Over-the-Counter Bulletin Board as of the end
of
such trading day; provided
that
if the
Common Stock has not traded in the ten (10) consecutive trading days prior
to
the Valuation Date, the Fair Market Value shall be the average of the closing
sale prices of one share of Common Stock in the most recent ten (10) trading
days during which the Common Stock has traded prior to the Valuation
Date;
(d) if
the
Common Stock is then included in the “pink sheets,” the average of the closing
sale prices of one share of Common Stock on the “pink sheets” over the ten (10)
consecutive trading days ending on the last trading day prior to the Valuation
Date or, if no closing sale price is available for any of such ten (10) trading
days, the closing sale price for such day shall be determined as the average
of
the high bid and the low ask price quoted on the “pink sheets” as of the end of
such trading day; provided
that
if the
Common Stock has not traded in the ten (10) consecutive trading days prior
to
the Valuation Date, the Fair Market Value shall be the average of the closing
sale prices
of one
share of Common Stock in the most recent ten (10) trading days during which
the
Common Stock has traded prior to the Valuation Date; or
(e) if
the
Common Stock is not then listed on a national securities exchange or quoted
on
Nasdaq or the Over-the-Counter Bulletin Board or the “pink sheets,” the Fair
Market Value of one share of Common Stock as of the Valuation Date shall
be
determined in good faith by mutual agreement of the Board and the
Holder;
provided that
if, in
such case, the Board and the Holder are unable to agree as to the Fair Market
Value of a share of Common Stock, such Fair Market Value shall be determined
by
an investment banker of national reputation selected by the Company and
reasonably acceptable to the Holder, the fees and expenses of which shall
be
borne by the Company. The Board shall respond promptly in writing to a written
inquiry by the Holder prior to the exercise hereunder as to the Fair Market
Value of a share of Common Stock.
-8-
Section
10. Restrictions
on Exercise Amount. Unless
a
Holder delivers to the Company irrevocable written notice prior to the date
of
issuance hereof or sixty-one (61) days prior to the effective date of such
notice that this Section
10
shall
not apply to such Holder, then, notwithstanding anything herein to the contrary,
the Holder shall not be entitled to exercise this Warrant for a number of
Warrant Shares to the extent that, upon such exercise, the number of shares
of
Common Stock then beneficially owned by such holder and its affiliates and
any
other persons or entities whose beneficial ownership of Common Stock would
be
aggregated with the Holder’s for purposes of Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”),
(including shares held by any “group” of which the holder is a member, but
excluding shares beneficially owned by virtue of the ownership of securities
or
rights to acquire securities that have limitations on the right to convert,
exercise or purchase similar to the limitation set forth herein) would exceed
4.99% of the total number of shares of Common Stock of the Company then issued
and outstanding immediately following such exercise. For purposes hereof,
“group” has the meaning set forth in Section 13(d) of the Exchange Act and
applicable regulations of the Securities and Exchange Commission (“SEC”),
and
the percentage held by the Holder shall be determined in a manner consistent
with the provisions of Section 13(d) of the Exchange Act. Each delivery of
a
Notice of Exercise by a Holder will constitute a representation by such Holder
that it has evaluated the limitation set forth in this Section
10
and
determined, based on the most recent public filings by the Company with the
SEC,
that the issuance of the full number of Warrant Shares requested in such
Notice
of Exercise is permitted under this Section
10.
Section
11. Modification
and Waiver.
This
Warrant and any provision hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the Company and the
then
current Holder, and such change, waiver, discharge or termination shall be
binding on any future Holder.
Section
12. Notices.
Unless
otherwise specifically provided herein, all communications under this Warrant
shall be in writing and shall be deemed to have been duly given (a) on the
date
personally delivered to the party to whom notice is to be given, (b) on the
day
of transmission if sent by facsimile transmission to, in the case of the
registered Holder, the facsimile number shown on the books of the Company
and,
in the case of the Company, the facsimile number set forth in Section
9.3
of the
Subscription Agreement, if sent during normal business hours; if not, then
at
the commencement of the next Business Day, in each case provided that the
sending party receives confirmation of the completion of such transmission,
(c)
on the Business Day after submitted for next day delivery to Federal Express
or
similar overnight courier which utilizes a written form of receipt, or (d)
on
the fifth (5th) day after mailing, if mailed to the party to whom notice
is to
be given, by first class mail, registered or certified, postage prepaid,
and
properly addressed, return receipt requested, to the registered Holder at
its
address as shown on the books of the Company or to the Company at the address
indicated in Section
9.3
of the
Subscription Agreement. Any party hereto may change its address for purposes
of
this Section
12
by
giving the other party written notice of the new address in the manner set
forth
herein.
Section
13. Descriptive
Headings.
The
descriptive headings contained in this Warrant are inserted for convenience
only
and do not constitute a part of this Warrant.
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Section
14. Governing
Law.
The
validity, interpretation and performance of this Warrant shall be governed
by,
and construed in accordance with, the laws of the State of California applicable
to contracts made and to be performed entirely within such State, regardless
of
the law that might be applied under principles of conflicts of law. The Company
and, by accepting this Warrant, the Holder, each irrevocably submits to the
exclusive jurisdiction of the state and federal courts located in California
for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Warrant and the transactions contemplated hereby. Service of
process
in connection with any such suit, action or proceeding may be served on each
party hereto anywhere in the world by the same methods as are specified for
the
giving of notices under this Warrant. The Company and, by accepting this
Warrant, the Holder, each irrevocably consents to the jurisdiction of any
such
court in any such suit, action or proceeding and to the laying of venue in
such
court. The Company and, by accepting this Warrant, the Holder, each irrevocably
waives any objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waives any claim that any
such
suit, action or proceeding brought in any such court has been brought in
an
inconvenient forum.
Section
15. Acceptance.
Receipt
and execution of this Warrant by the Holder hereof shall constitute acceptance
of and agreement to the foregoing terms and conditions.
Section
16. Identity
of Transfer Agent.
The
transfer agent for the Common Stock is American Stock Transfer and Trust
Company. Upon the appointment of any subsequent transfer agent for the Common
Stock or other shares of the Company’s capital stock issuable upon the exercise
of the rights of purchase represented by this Warrant, the Company will mail
to
the Holder a statement setting forth the name and address of such transfer
agent.
Section
17. No
Impairment of Rights.
The
Company will not, by amendment of its Certificate of Incorporation or through
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 holder
of
this Warrant against material impairment.
Section
18. Transferability.
Subject
to compliance with applicable federal and state securities laws, this Warrant
may be transferred by the Holder with respect to any or all of the Warrant
Shares then purchasable hereunder. Upon surrender of this Warrant to the
Company, together with a properly endorsed notice of transfer, for transfer
of
this Warrant in its entirety by the Holder, the Company shall issue a new
warrant of the same denomination to the designated transferee. Upon surrender
of
this Warrant to the Company, together with a properly endorsed notice of
transfer, by the Holder for transfer with respect to a portion of the Warrant
Shares then purchasable hereunder, the Company shall issue a new warrant
to the
designated transferee, in such denomination as shall be requested by the
Holder
hereof, and shall issue to such Holder a new warrant covering the number
of
Warrant Shares in respect of which this Warrant shall not have been
transferred.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be executed on its behalf by one of its
officers thereunto duly authorized.
| AEOLUS PHARMACEUTICALS, INC. | ||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. | |
| Name: | ▇▇▇▇▇▇▇ ▇. Burggon, Jr. | |
| Title: | Chief Executive Officer | |
-11-
APPENDIX
A
NOTICE
OF EXERCISE
1. The
undersigned hereby irrevocably elects to purchase ________ shares of Common
Stock of Aeolus Pharmaceuticals, Inc. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares
in
full, by [cash,
certified check or wire transfer]
[select the applicable method of payment].
2. Please
issue a certificate or certificates representing said shares in the name
of the
undersigned or in such other name or names as are specified below:
______________________________
______________________________
(Name)
______________________________
(Address)
_________________________
(Signature)
__________________(Date)
3. Please
issue a new Warrant of equivalent form and tenor for the unexercised portion
of
the attached Warrant in the name of the undersigned or in such other name
as is
specified below:
_______________________________________
Date:
__________________________________
(Warrantholder)
__________________________
Name:
(Print) ____________________________
By:____________________________________