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Exhibit 4.2
SERIES 1 WARRANT NO. ____
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID
ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED.
SERIES 1 WARRANT
To Purchase ______ Shares of Common Stock of
ALTEON INC.
THIS IS TO CERTIFY THAT _____________________________________,
or registered assigns (the "Holder"), is entitled, at any time prior to the
Expiration Date (as hereinafter defined), to purchase from Alteon Inc. a
Delaware corporation (the "Company"), the Warrant Stock (as hereinafter defined
and subject to adjustment as provided herein), in whole or in part, at a
purchase price of $3.40 per share, all on and subject to the terms and
conditions hereinafter set forth.
1. DEFINITIONS. As used in this Warrant, the following terms
have the respective meanings set forth below:
"Additional Shares of Common Stock" means any shares of Common
Stock issued by the Company after the Closing Date other than Warrant Stock.
"Appraised Value" means, in respect of any share of Common
Stock on any date herein specified, the fair saleable value of such share of
Common Stock (determined without giving effect to the discount for (i) a
minority interest or (ii) any lack of liquidity of the Common Stock or to the
fact that the Company may have no class of equity registered under the Exchange
Act) as of the last day of the most recent fiscal month ending prior to such
date specified, based on the value of the Company, as determined by a nationally
recognized investment banking firm selected by the Company's Board of Directors
and having no prior relationship with the Company, divided by the number of
Fully Diluted Outstanding shares of Common Stock.
"Business Day" means any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in the State of
New York.
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"Change of Control" means the sale, conveyance, or other
disposition of all or substantially all of the property or business of the
Company or the merger into or consolidation with any other corporation (other
than a wholly owned subsidiary corporation) or effectuation of any transaction
or series of related transactions in which more than 50% of the voting power of
the Company is disposed of.
"Closing Date" means September 29, 2000.
"Commission" means the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" means (except where the context otherwise
indicates) the Common Stock, $0.01 par value, of the Company as constituted on
the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed or converted, and shall also include (i) capital stock of
the Company of any other class (regardless of how denominated) issued to the
Holders of shares of Common Stock upon any reclassification thereof which is
also not preferred as to dividends or assets on liquidation over any other class
of stock of the Company and which is not subject to redemption and (ii) shares
of common stock of any successor or acquiring corporation received by or
distributed to the Holders of Common Stock of the Company in the circumstances
contemplated by Section 4.8.
"Convertible Securities" means evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
Additional Shares of Common Stock, either immediately or upon the occurrence of
a specified date or a specified event.
"Current Market Price" means, in respect of any share of
Common Stock on any date herein specified, if there shall not then be a public
market for the Common Stock, the Appraised Value per share of Common Stock at
such date, or if there shall then be a public market for the Common Stock, the
average of the daily market prices for 20 consecutive Business Days commencing
30 days before such date. The daily market price for each such Business Day
shall be (i) the last sale price on such day on the principal stock exchange on
which such Common Stock is then listed or admitted to trading, (ii) if no sales
take place on such day on any such exchange, the average of the last reported
closing bid and asked prices on such day as officially quoted on any such
exchange, (iii) if the Common Stock is not then listed or admitted to trading on
any stock exchange, the average of the last reported closing bid and asked
prices on such day in the over-the-counter market, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., or (iv) if neither such corporation at the time is
engaged in the business of reporting such prices, as furnished by any similar
firm then engaged in such business.
"Current Warrant Price" means, in respect of a share of Common
Stock at any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this
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Warrant on such date. Until the Current Warrant Price is adjusted pursuant to
the terms herein, the initial Current Warrant Price shall be $3.40 per share.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" means the period during which this Warrant
is exercisable pursuant to Section 2.1.
"Expiration Date" means the seventh anniversary of the Closing
Date, or such later date to which the Expiration Date has been extended pursuant
to the terms hereof.
"Fully Diluted Outstanding" means, when used with reference to
Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding at such date and all shares
of Common Stock issuable in respect of the Warrants and Convertible Securities
that would be deemed outstanding in accordance with GAAP for purposes of
determining book value or net income per share.
"GAAP" means generally accepted accounting principles in the
United States of America as from time to time in effect.
"NASD" means the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Other Property" has the meaning set forth in Section 4.9.
"Outstanding" means, when used with reference to Common Stock,
at any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held by or for the
account of the Company or any subsidiary thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
"Purchase Agreement" means the Common Stock and Warrant
Purchase Agreement, dated the Closing Date, among the Company, the Holder of
this Warrant (or such Holder's predecessor in interest with respect to this
Warrant) and certain other Persons.
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"Restricted Common Stock" means shares of Common Stock which
are, or which upon their issuance on the exercise of any Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in Section
3.2.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Series 1 Warrant Stock" means the Warrant Stock.
"Terminating Transaction" means any transaction in which (i)
the Company shall (A) reorganize its capital, reclassify its capital stock, or
(B) consolidate or merge with or into another corporation where the Company is
not the surviving corporation or where there is a change in or distribution with
respect to the Common Stock of the Company, or (C) sell, transfer or otherwise
dispose of all or substantially all its property, assets or business to another
corporation, and (ii) pursuant to the terms of such reorganization,
reclassification, merger, consolidation or sale, transfer or other disposition
of assets, the holders of 90% or more of the Common Stock of the Company are to
receive shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation (all such
property, the "Terminating Transaction Consideration").
"Transfer" means any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.
"Warrants" means this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof. All
Warrants shall at all times be identical as to terms and conditions and date,
except as to the number of shares of Common Stock for which they may be
exercised.
"Warrant Price" means an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price.
"Warrant Stock" means the shares of Common Stock to be
purchased upon the exercise hereof, subject to adjustment as provided herein.
Terms not otherwise defined herein shall have the meanings
ascribed to them in the Purchase Agreement.
2. EXERCISE OF WARRANT.
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2.1. Manner of Exercise. From and after the issuance of this
Warrant, and until 5:00 P.M., New York time, on the Expiration Date (the
"Exercise Period"), the Holder may exercise this Warrant, on any Business Day,
for all or any part of the number of shares of Warrant Stock purchasable
hereunder.
In order to exercise this Warrant, in whole or in part, the
Holder shall deliver to the Company at its principal office or at the office or
agency designated by the Company pursuant to Section 12, (i) a written notice of
Holder's election to exercise this Warrant, which notice shall specify the
number of shares of Warrant Stock to be purchased, (ii) payment of the Warrant
Price as provided herein, and (iii) this Warrant. Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as Exhibit A, duly executed by the Holder or its agent or attorney. Upon
receipt thereof, the Company shall, as promptly as practicable, and in any event
within five Business Days thereafter, execute or cause to be executed and
deliver or cause to be delivered to the Holder a certificate or certificates
representing the aggregate number of full shares of Warrant Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as the Holder
shall request in the notice and shall be registered in the name of the Holder
or, such other name as shall be designated in the notice. This Warrant shall be
deemed to have been exercised and such certificate or certificates shall be
deemed to have been issued, and the 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 date when the notice, together with the
payment of the Warrant Price and this Warrant, is received by the Company as
described above. If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
Warrant Stock, deliver to the Holder a new Warrant evidencing the rights of the
Holder to purchase the unpurchased shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or at the request of the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder.
Payment of the Warrant Price may be made at the
option of the Holder by: (i) certified or official bank check, or (ii) the
cancellation of a portion of Warrant Stock otherwise acquirable under the
Warrants then held by the Holder, which shall be valued and credited toward the
total Warrant Price due the Company for the exercise of the Warrant based upon
the Current Market Price of the Common Stock. All shares of Common Stock
issuable upon the exercise of this Warrant pursuant to the terms hereof shall be
validly issued and, upon payment of the Warrant Price, shall be fully paid and
nonassessable and not subject to any preemptive rights. The Company shall pay
all expenses in connection with, and all transfer, stamp or similar taxes and
other governmental charges that may be imposed with respect to, the issue or
delivery thereof.
2.2. Fractional Shares. The Company shall not be required to
issue a fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights under
which are exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, the Company shall pay a cash adjustment in
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respect of such final fraction in an amount equal to the Current Market Price
per share of Common Stock on the date of exercise multiplied by such fraction.
2.3. Continued Validity. A Holder of shares of Common Stock
issued upon the exercise of this Warrant, in whole or in part (other than a
Holder who acquires such shares after the same have been publicly sold pursuant
to a Registration Statement under the Securities Act or sold pursuant to Rule
144 thereunder), shall continue to be entitled with respect to such shares to
all rights to which it would have been entitled as the Holder under Sections 10
and 13 of this Warrant.
2.4. Restrictions on Exercise. (a) Notwithstanding anything to
the contrary contained herein, in no event shall the Warrant be exercisable for
an amount of Warrant Stock where such exercisability would result in the
Holder's becoming the beneficial owner, directly or indirectly, of more than 10%
of the outstanding shares of Common Stock.
(b) Notwithstanding anything to the contrary
contained herein, if at any time that this Warrant is exercised, in whole or in
part, the Registration Statement contemplated by the Purchase Agreement is not
then effective, and the Warrant Stock in the hands of the Holder is not then
exempt from the registration requirements of the Securities Act, then the Holder
shall furnish to the Company the representations contemplated by Sections 2.2(d)
and (e) of the Purchase Agreement (with respect to investment intent and
accredited investor status).
3. TRANSFER, DIVISION AND COMBINATION.
3.1. Transfer. The Warrants and the Warrant Stock shall be
freely transferable, subject to compliance with all applicable laws, including,
but not limited to the Securities Act. Transfer of this Warrant and all rights
hereunder, in whole or in part, shall be registered on the books of the Company
to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company referred to in Section 2.1 or the office or
agency designated by the Company pursuant to Section 12, together with a written
assignment of this Warrant substantially in the form of Exhibit B hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be canceled. Notwithstanding anything herein to
the contrary, this Warrant may not be transferred or assigned in whole or in
part without compliance with applicable federal and state securities laws.
Following a transfer that complies with the requirements of this Section 3.1,
the Warrant may be exercised by a new Holder for the purchase of shares of
Common Stock regardless of whether the Company issued or registered a new
Warrant on the books of the Company.
3.2. Restrictive Legend. Unless such stock has been
registered, each certificate for Warrant Stock initially issued upon the
exercise of this Warrant, and each certificate for Warrant
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Stock issued to any subsequent transferee of any such certificate, shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
AS AMENDED, AND MAY NOT BE SOLD, ASSIGNED OR
TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER
SAID ACT IS NOT REQUIRED."
3.3. Division and Combination; Expenses; Books. This Warrant
may be divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 3.1 as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3. The Company agrees to maintain, at its aforesaid office or agency,
books for the registration and the registration of transfer of the Warrants.
4. ADJUSTMENTS. The number of shares of Common Stock for which
this Warrant is exercisable, and the price at which such shares may be purchased
upon exercise of this Warrant, shall be subject to adjustment from time to time
as set forth in this Section 4. The Company shall give the Holder notice of any
event described below which requires an adjustment pursuant to this Section 4 in
accordance with Sections 5.1 and 5.2.
4.1. Stock Dividends, Subdivisions and Combinations. If at any
time the Company shall:
(a) take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend payable in, or
other distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock,
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then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares of
Common Stock for which this Warrant is exercisable immediately after such
adjustment.
4.2. Certain Other Distributions. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(a) cash (other than a cash dividend payable out of
earnings or earned surplus legally available for the payment of
dividends under the laws of the jurisdiction of incorporation of the
Company),
(b) any evidences of its indebtedness, any shares of
stock of any class or any other securities or property of any nature
whatsoever (other than cash, Convertible Securities or Additional
Shares of Common Stock), or
(c) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of stock of any
class or any other securities or property of any nature whatsoever
(other than cash, Convertible Securities or Additional Shares of Common
Stock),
then (i) the number of shares of Common Stock for
which this Warrant is exercisable shall be adjusted to equal
the product of the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to such
adjustment multiplied by a fraction (A) the numerator of which
shall be the Current Market Price per share of Common Stock at
the date of taking such record and (B) the denominator of
which shall be such Current Market Price per share of Common
Stock minus the amount allocable to one share of Common Stock
of any such cash so distributable and of the fair value (as
determined in good faith by the Board of Directors of the
Company and supported by an opinion from an investment banking
firm of recognized national standing acceptable to the Holder)
of any and all such evidences of indebtedness, shares of
stock, other securities or property or warrants or other
subscription or purchase rights so distributable, and (ii) the
Current Warrant Price shall be adjusted to equal (A) the
Current Warrant Price multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to the adjustment divided by (B) the number of shares of
Common Stock for which this Warrant is exercisable immediately
after such adjustment. A reclassification of the Common Stock
(other than a change in par value, or from par
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value to no par value or from no par value to par value) into
shares of Common Stock and shares of any other class of stock
shall be deemed a distribution by the Company to the holders
of its Common Stock of such shares of such other class of
stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a
larger or smaller number of shares of Common Stock as a part
of such reclassification, such change shall be deemed a
subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of
Section 4.1; provided, however, that if the Company believes
that the rules of the American Stock Exchange or any other
exchange or automated quotation system on which the Common
Stock is then quoted require, then in lieu of the adjustment
required by this Section 4.2 the Company may deliver to each
Holder the amount of cash, evidences of indebtedness,
securities or other property or warrants or other rights to
which such Holder would have been entitled if it had exercised
its Warrants immediately prior to the date such adjustment
would otherwise be required to be made.
4.3. Issuance of Additional Shares of Common Stock.
(a) In the event the Company shall, at any time, from
time to time, issue or sell any Additional Shares of Common Stock
(including Treasury Shares) for a consideration per share less than the
Current Warrant Price in effect for the Warrant immediately prior to
the time of such issue or sale, then, forthwith upon such issue or
sale, the Current Warrant Price for the Warrants shall be reduced to a
price equal to the consideration per share paid for such Common Stock.
(b) The provisions this Section 4.3 shall not apply
to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 4.1 or 4.2. No adjustment of the
Current Warrant Price shall be made under this Section 4.3 upon the
issuance of any Additional Shares of Common Stock which are issued
pursuant to the exercise of any warrants or other subscription or
purchase rights or pursuant to the exercise of any conversion or
exchange rights in any Convertible Securities, if any such adjustment
shall previously have been made upon the issuance of such warrants or
other rights or upon the issuance of such Convertible Securities (or
upon the issuance of any warrant or other rights therefor) pursuant to
Section 4.4 or Section 4.5.
4.4. Issuance of Warrants or Other Rights. If at any time the
Company shall take a record of the Holders of its Common Stock for the purpose
of entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable upon the
exercise of such warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Current Warrant Price in effect
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immediately prior to the time of such issue or sale, then the Current Warrant
Price shall be adjusted as provided in Section 4.3 on the basis that the Company
shall have received all of the consideration payable therefor, if any, as of the
date of the actual issuance of such warrants or other rights. No adjustments of
the Current Warrant Price shall be made upon the actual issue of such Common
Stock or of such Convertible Securities upon exercise of such warrants or other
rights or upon the actual issue of such Common Stock upon such conversion or
exchange of such Convertible Securities.
4.5. Issuance of Convertible Securities. If at any time the
Company shall take a record of the Holders of its Common Stock for the purpose
of entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Current Warrant Price in effect immediately
prior to the time of such issue or sale, then the Current Warrant Price shall be
adjusted as provided in Section 4.3 on the basis that the Company shall have
received all of the consideration payable therefor, if any, as of the date of
actual issuance of such Convertible Securities. No further adjustment of the
Current Warrant Price shall be made under this Section 4.5 upon the issuance of
any Convertible Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such warrants or
other rights pursuant to Section 4.4. No further adjustments of the Current
Warrant Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
4.6. Superseding Adjustment. If, at any time after any
adjustment of the Current Warrant Price shall have been made pursuant to Section
4.4 or Section 4.5 as the result of any issuance of warrants, other rights or
Convertible Securities, and (i) such warrants or other rights, or the right of
conversion or exchange in such other Convertible Securities, shall expire, and
all or a portion of such warrants or other rights, or the right of conversion or
exchange with respect to all or a portion of such other Convertible Securities,
as the case may be shall not have been exercised, or (ii) the consideration per
share for which shares of Common Stock are issuable pursuant to such warrants or
other rights, or the terms of such other Convertible Securities, shall be
increased solely by virtue of provisions therein contained for an automatic
increase in such consideration per share upon the occurrence of a specified date
or event, then for each outstanding Warrant such previous adjustment shall be
rescinded and annulled and the Additional Shares of Common Stock which were
deemed to have been issued by virtue of the computation made in connection with
the adjustment so rescinded and annulled shall no longer be deemed to have been
issued by virtue of such computation.
Upon the occurrence of an event set forth in this
Section 4.6 above, there shall be a recomputation made of the effect of such
warrants, other rights or options or other Convertible Securities on the basis
of: (i) treating the number of Additional Shares of Common Stock or other
property, if any, theretofore actually issued or issuable pursuant to the
previous exercise of any such warrants or other rights or any such right of
conversion or exchange, as having been issued on the date or dates of any such
exercise and for the consideration actually received and receivable therefor,
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and (ii) treating any such warrants or other rights or any such other
Convertible Securities which then remain outstanding as having been granted or
issued immediately after the time of such increase of the consideration per
share for which shares of Common Stock or other property are issuable under such
warrants or other rights or other Convertible Securities; whereupon a new
adjustment of the Current Warrant Price shall be made, which new adjustment
shall supersede the previous adjustment so rescinded and annulled.
4.7. Other Provisions applicable to Adjustments under this
Section. The following provisions shall be applicable to the making of
adjustments of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that
any Additional Shares of Common Stock or any Convertible Securities or
any warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities shall
be issued for cash consideration, the consideration received by the
Company therefor shall be the amount of the cash received by the
Company therefor, or, if such Additional Shares of Common Stock or
Convertible Securities are offered by the Company for subscription, the
subscription price, or, if such Additional Shares of Common Stock or
Convertible Securities are sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering
price (in any such case subtracting any amounts paid or receivable for
accrued interest or accrued dividends and without taking into account
any compensation, discounts or expenses paid or incurred by the Company
for and in the underwriting of, or otherwise in connection with, the
issuance thereof). To the extent that such issuance shall be for a
consideration other than cash, then, except as herein otherwise
expressly provided, the amount of such consideration shall be deemed to
be the fair value of such consideration at the time of such issuance as
determined in good faith by the Board of Directors of the Company. In
case any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or purchase
such Additional Shares of Common Stock or Convertible Securities shall
be issued in connection with any merger in which the Company issues any
securities, the amount of consideration therefor shall be deemed to be
the fair value, as determined in good faith by the Board of Directors
of the Company, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to
be attributable to such Additional Shares of Common Stock, Convertible
Securities, warrants or other rights, as the case may be. The
consideration for any Additional Shares of Common Stock issuable
pursuant to any warrants or other rights to subscribe for or purchase
the same shall be the consideration received by the Company for issuing
such warrants or other rights plus the additional consideration
payable to the Company upon exercise of such warrants or other rights.
The consideration for any Additional Shares of Common Stock issuable
pursuant to the terms of any Convertible Securities shall be the
consideration received by the Company for issuing warrants or other
rights to subscribe for or purchase such Convertible Securities, plus
the consideration paid or payable to the Company in respect of the
subscription for or purchase
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of such Convertible Securities, plus the additional consideration, if
any, payable to the Company upon the exercise of the right of
conversion or exchange in such Convertible Securities. In case of the
issuance at any time of any Additional Shares of Common Stock or
Convertible Securities in payment or satisfaction of any dividends upon
any class of stock other than Common Stock, the Company shall be deemed
to have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of such
dividend so paid or satisfied.
(b) When Adjustments to Be Made. The adjustments
required by this Section 4 shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that any
adjustment of the number of shares of Common Stock for which this
Warrant is exercisable that would otherwise be required may be
postponed (except in the case of a subdivision or combination of shares
of the Common Stock, as provided for in Section 4.1) up to, but not
beyond the date of exercise if such adjustment either by itself or with
other adjustments not previously made adds or subtracts less than 1% of
the shares of Common Stock for which this Warrant is exercisable
immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount (except as
aforesaid) which is postponed shall be carried forward and made as soon
as such adjustment, together with other adjustments required by this
Section 4 and not previously made, would result in a minimum adjustment
or on the date of exercise. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments
under this Section 4, fractional interests in Common Stock shall be
taken into account to the nearest 1/100th of a share.
(d) When Adjustment Not Required. If the Company
shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or distribution or subscription
or purchase rights and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled. In addition, no adjustment shall be
required under Section 4.3 (a) or (b) hereof in the event the Company
issues or sells Additional Shares in a transaction whose primary
purpose is to establish a Strategic Alliance (as defined in paragraph
(g) below).
(e) Escrow of Warrant Stock. If after any property
becomes distributable pursuant to this Section 4 by reason of the
taking of any record of the holders of Common Stock, but prior to the
occurrence of the event for which such record is taken, and the Holder
exercises this Warrant, any shares of Common Stock issuable upon
exercise by reason of such adjustment shall be deemed the last shares
of Common Stock for which this Warrant is exercised (notwithstanding
any other provision to the contrary herein) and such shares or other
property shall be held in escrow for the Holder by the Company to be
issued to the
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Holder upon and to the extent that the event actually takes place, upon
payment of the Current Warrant Price. Notwithstanding any other
provision to the contrary herein, if the event for which such record
was taken fails to occur or is rescinded, then such escrowed shares
shall be cancelled by the Company and escrowed property returned.
(f) Challenge to Good Faith Determination. Whenever
the Board of Directors of the Company shall be required to make a
determination in good faith of the fair value of any item under this
Section 4, such determination may be challenged by the Holder, and any
dispute shall be resolved by either (i) an investment banking or
accounting firm of recognized national standing selected by the Holder
and reasonably acceptable to the Company in a manner customary for such
evaluations and no arbitration or similar hearings shall be conducted
in connection therewith or (ii) any other method mutually agreed to by
the parties hereto.
(g) Existing Obligations. Notwithstanding any
contrary or inconsistent provision of Sections 4.3, 4.4 or 4.5, no
adjustment shall be made on account of the issuance of Additional
Shares of Common Stock pursuant to (i) options or other rights to
acquire Common Stock or Convertible Securities pursuant to the
Company's existing stock option plans, employee benefit plans,
employment contracts or other similar benefit or incentive programs or
agreements in effect on the date hereof or approved after the date
hereof by the stockholders of the Company, where the primary purpose of
such plan, contract or program or agreement is not to raise capital for
the Company, (ii) any other outstanding options, warrants, Convertible
Securities or other rights to the issuance of Additional Shares of
Common Stock which are outstanding on the First Tranche Closing Date or
are issued after the First Tranche Closing Date upon Convertible
Securities that were outstanding on the First Tranche Closing Date, or
(iii) a Strategic Alliance. As used herein "Strategic Alliance" means a
transaction in which (i) the acquirer of the Company's capital stock
has a business relationship with the Company which is (A) material to
the Company independent of such acquirer's acquisition of the Company's
capital stock, and (B) arises out of the transaction in which the
acquirer acquired the Company's capital stock.
4.8. Terminating Transaction (Reorganization,
Reclassification, Merger, Consolidation or Disposition of Assets); Redemption.
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(a) If the Company agrees to a Terminating Transaction, then
the Holder of this Warrant shall have the right thereafter to receive, upon
exercise of this Warrant, the Terminating Transaction Consideration that would
have been receivable as a result of such Terminating Transaction if the Warrant
Stock acquirable hereunder had been outstanding prior to the record date of the
Terminating Transaction. The successor or acquiring corporation (if other than
the Company) in the Terminating Transaction shall expressly assume the due and
punctual observance and performance of each and every covenant and condition of
this Warrant to be performed and observed by the Company, and all the
obligations and liabilities hereunder, subject to such modifications as may be
deemed appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of shares of the Common Stock for
which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4; provided,
however, that if the successor or acquiring corporation fails or refuses to
expressly assume the obligations as set forth in the preceding sentence, the
Company shall redeem the Warrants as provided in paragraph (b) below. For
purposes of this Section 4.8, common stock of the successor or acquiring
corporation shall include stock of such corporation of any class which is not
preferred as to dividends or assets on liquidation over any other class of stock
of such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for any such stock, either immediately or
upon the arrival of a specified date or the happening of a specified event and
any warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4.8 shall similarly apply to successive
Terminating Transactions.
(b) This Warrant shall be redeemed by the Company if and only
if the Company agrees to and thereafter carries out a Terminating Transaction in
which the surviving or acquiring corporation does not expressly assume the
obligations with respect to the Warrants as provided in paragraph (a) above. To
effect such redemption, the Company shall:
(i) give to each Holder notice of its intent to
redeem this Warrant (the "Redemption Notice") not less than thirty (30)
days prior to the closing of the Terminating Transaction; and
(ii) redeem all the Warrants in the series of which
this Warrant is a part, in accordance with the Redemption Notice and
the provisions of this paragraph (b) for the full consideration
specified in paragraph (c) below immediately prior to or simultaneously
with the closing of the Terminating Transaction.
(c) The redemption price for all the Warrants (the "Redemption
Price") shall equal the Intrinsic Value plus the Time Value, each as defined
below.
(i) The Intrinsic Value equals (A) the total number
of shares of Warrant Stock, multiplied by (B) the Fair Market Value of
consideration that would be receivable by the holders of the Warrant
Stock if it were outstanding as of the closing time of the Terminating
Transaction, reduced by (C) the aggregate Warrant Price for all of the
Warrant
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Stock. For purposes hereof, "Fair Market Value" means the value
assigned to or utilized in the agreement by which the Company has
agreed to a Terminating Transaction.
(ii) The Time Value equals (A) the aggregate Warrant
Price for all of the Warrant Stock, multiplied by (B) the applicable
Time Value Percentage specified in subparagraph (iii) below.
(iii) The Time Value Percentage shall be:
10% if the Redemption Notice is given
less than 366 days prior to the
Expiration Date;
15% if the Redemption Notice is given
less than 731 days and more than 365
days prior to the Expiration Date;
20% if the Redemption Notice is given
less than 1096 days and more than
730 days prior to the Expiration
Date;
25% if the Redemption Notice is given
more than 1095 days prior to the
Expiration Date.
(d) In the period commencing with the giving of the Redemption
Notice and ending with the closing of the Terminating Transaction, the Holder of
this Warrant shall continue without interruption to have the right to exercise
this Warrant on the same basis as if no Redemption Notice had been given,
including without limitation by paying the exercise price in cash or by cashless
exercise as provided in this Warrant.
4.9. Other Action Affecting Common Stock. In case at any time
or from time to time the Company shall take any action in respect of its Common
Stock, other than the payment of dividends permitted by Section 4.2(a) or any
other action described in this Section 4, then, unless such action will not have
a materially adverse effect upon the rights of the Holder, the number of shares
of Common Stock or other stock for which this Warrant is exercisable and/or the
purchase price thereof shall be adjusted in such manner as may be equitable in
the circumstances.
4.10 Certain Other Limitations. Notwithstanding anything
herein to the contrary, the Company agrees not to enter into any transaction
which, by reason of any adjustment hereunder, would cause the Current Warrant
Price to be less than the par value per share of Common Stock.
5. NOTICES TO WARRANT HOLDERS.
5.1. Notice of Adjustments. Whenever the number of shares of
Common Stock for which this Warrant is exercisable, or whenever the price at
which a share of such Common Stock may be purchased upon exercise of this
Warrant, shall be adjusted pursuant to Section 4, the Company shall forthwith
prepare a certificate to be executed by the chief financial officer of the
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Company setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated (including a description
of the basis on which the Board of Directors of the Company determined the fair
value of any evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights referred to in
Section 4.2 or 4.8), specifying the number of shares of Common Stock for which
this Warrant is exercisable and (if such adjustment was made pursuant to Section
4.9 or 4.10) describing the number and kind of any other shares of stock or
Other Property for which this Warrant is exercisable, and any change in the
purchase price or prices thereof, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate to be
delivered to the Holder in accordance with Section 16.2. The Company shall keep
at its principal office or agency designated pursuant to Section 12 copies of
all such certificates and cause the same to be available for inspection at said
office during normal business hours by the Holder or any prospective purchaser
of this Warrant designated by the Holder.
5.2. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them to receive a
dividend (other than a cash dividend payable out of earnings or earned
surplus legally available for the payment of dividends under the laws
of the jurisdiction of incorporation of the Company) or other
distribution, or any right to subscribe for or purchase any evidences
of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of the
Company, any reclassification or recapitalization of the capital stock
of the Company or any consolidation or merger of the Company with, or
any sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company; then, in any one
or more of such cases, the Company shall give to the Holder (i) at
least 30 days' prior written notice of the date on which a record date
shall be selected for such dividend, distribution or right or for
determining rights to vote in respect of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, and (ii) in the case of any
such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up, at least
30 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall
specify (i) the date on which any such record is to be taken for the
purpose of such dividend, distribution or right, the date on which the
holders of Common Stock shall be entitled to any such dividend,
distribution or right, and the amount and character thereof, and (ii)
the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or
winding up is to take place and the time, if any such time is to be
fixed, as of which the holders of Common Stock shall be entitled to
exchange their shares of Common
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Stock for securities or other property deliverable upon such
reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up. Each
such written notice shall be sufficiently given if addressed to the
Holder at the last address of the Holder appearing on the books of the
Company and delivered in accordance with Section 16.2.
5.3. Notice to Stockholders. The Holder shall be entitled to
the same rights to receive notice of corporate action as any holder of Common
Stock.
6. NO IMPAIRMENT. The Company shall not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above
the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
Upon the request of the Holder, the Company will at any time during the period
this Warrant is outstanding acknowledge in writing, in form satisfactory to the
Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK: REGISTRATION
WITH APPROVAL OF ANY GOVERNMENTAL AUTHORITY. Except as provided in the Purchase
Agreement, from and after the Closing Date, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of all outstanding Warrants. All shares of Common
Stock which shall be so issuable, when issued upon exercise of any Warrant and
payment therefor in accordance with the terms of such Warrant, shall be duly and
validly issued and fully paid and nonassessable, and not subject to preemptive
rights. Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such adjusted Current Warrant Price. Before taking any action which would result
in an adjustment in the number of shares of Common Stock for which this Warrant
is exercisable or in the Current Warrant Price, the Company shall obtain all
such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon exercise
of Warrants require registration or qualification with any
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governmental authority under any federal or state law before such shares may be
so issued (other than as a result of a prior or contemplated distribution by the
Holder of this Warrant), the Company will in good faith and as expeditiously as
possible and at its expense endeavor to cause such shares to be duly registered.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS. In the
case of all dividends or other distributions by the Company to the holders of
its Common Stock with respect to which any provision of Section 4 refers to the
taking of a record of such holders, the Company will in each such case take such
a record and will take such record as of the close of business on a Business
Day. The Company will not at any time, except upon dissolution, liquidation or
winding up of the Company, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise or transfer of any
Warrant.
9. REGISTRATION RIGHTS. The Warrant Stock shall be registered
in accordance with the terms and conditions contained in that certain
Registration Rights Agreement dated as of the Closing Date between the Holder
and the Company.
10. SUPPLYING INFORMATION. Upon the occurrence of an Event as
defined in the Registration Rights Agreement, the Company shall cooperate with
the Holder in supplying such information as may be reasonably necessary for such
Holder to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any Warrant or Restricted
Common Stock.
11. LOSS OR MUTILATION. Upon receipt by the Company from the
Holder of evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of this Warrant and indemnity reasonably
satisfactory to it (it being understood that the written agreement of the
original Holder shall be sufficient indemnity) and in case of mutilation upon
surrender and cancellation hereof, the Company will execute and deliver in lieu
hereof a new Warrant of like tenor to the Holder; provided, however, that in the
case of mutilation, no indemnity shall be required if this Warrant in
identifiable form is surrendered to the Company for cancellation.
12. OFFICE OF THE COMPANY. As long as any of the Warrants
remain outstanding, the Company shall maintain an office or agency (which may be
the principal executive offices of the Company) where the Warrants may be
presented for exercise, registration of transfer, division or combination as
provided in this Warrant.
13. FINANCIAL AND BUSINESS INFORMATION. The Company will file
on or before the required date all regular or periodic reports (pursuant to the
Exchange Act) with the Commission and the securities exchanges on which shares
of Common Stock are listed.
14. LIMITATION OF LIABILITY. No provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Common Stock,
and no enumeration herein of the rights or privileges of the Holder hereof,
shall give rise to any liability of the Holder for the purchase price
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of any Common Stock or as a stockholder of the Company, whether such liability
is asserted by the Company or by creditors of the Company.
15. MISCELLANEOUS.
15.1. Nonwaiver and Expenses. No course of dealing or any
delay or failure to exercise any right hereunder on the part of the Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights, powers
or remedies. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.
15.2. Notice Generally. All notices, requests, demands or
other communications provided for herein shall be in writing and shall be deemed
to have been given three days after being sent by registered or certified mail,
return receipt requested, or when personally delivered, or successfully sent by
facsimile transmission as evidenced by a fax machine confirmation report there
of, addressed, as the case may be, to the Holder at the address set forth on the
cover page hereof, with a copy to ββββ βββββββ, P.C., ββββ ββββββ ββ βββ
ββββββββ, βββ ββββ, βββ ββββ βββββ, Attention: ββββββ β. ββββββββ, Esq.,
Facsimile No. (βββ) βββ-ββββ; or to the Company, Inc. at Alteon Inc., βββ
ββββββββ βββββ, ββββββ, βββ ββββββ βββββ, Attention: βββββββ β. ββββ, President
and Chief Executive Officer, Facsimile No. βββ-βββ-ββββ; with a copy to Smith,
Stratton, Wise, βββββ & βββββββ, βββ βββββββ ββββ ββββ, βββββββββ, βββ ββββββ
βββββ, Attention: βββββββ β. βββββ, Esq., Facsimile No. βββ-βββ-ββββ, or to such
other person or address as either party shall designate to the other from time
to time in writing forwarded in like manner.
15.3 Indemnification.
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(a) Generally. (i) The Company agrees to indemnify and hold
harmless each Holder (which term, for purposes of this Section 15.3, includes
each Holder and its respective directors, partners, members, managers, officers
and employees), from and against (A) any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses and disbursements of any kind which may be imposed upon, incurred by or
asserted against the Holder in any manner relating to or arising out of any
breach or default of any representation, warranty, covenant or other obligation
of the Company under this Agreement, the Registration Rights Agreement or the
Purchase Agreement, or (B) any claim asserted against a Holder in such Holder's
capacity as a holder of the Shares or Warrants by a third party (other than
another Holder) resulting from or arising out of any acts or omissions by the
Company; and the Company will reimburse the Holder for any legal or other
expenses reasonably incurred in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable hereunder to the extent
that any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses or disbursements are
found in a final non-appealable judgment by a court to have arisen out of or to
have been based upon (A) the Holder's gross negligence, bad faith or willful
misconduct in its capacity as a holder of the Shares or Warrants, or (B) any
untrue statements or omissions made by the Holder to the Company in writing for
inclusion in the registration statement of the Company.
(ii) Each Holder, severally and not jointly, agrees
to indemnify and hold harmless the Company from and against any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, attorneys' fees, expenses and disbursements of any kind which may be
imposed upon, incurred by or asserted against the Company in any manner relating
to or arising out of any breach or default of any representation, warranty,
covenant or other obligation of such Holder under this Agreement and the
Registration Rights Agreement; and each Holder, severally and not jointly, will
reimburse the Company for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that no
Holder shall be liable hereunder to the extent that any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, attorneys' fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have arisen out of or to have been based
upon (i) the Company's gross negligence, bad faith or willful misconduct, or
(ii) any untrue statements or omissions made by the Company in the registration
statement of the Company.
(b) Registration. (i) Upon the filing of the Registration
Statement, the Company agrees to indemnify and hold harmless the Holder, each
underwriter, broker or dealer, if any, and their respective directors, officers
and employees, and each other Person, if any, who controls the Holder (or an
assignee thereof), within the meaning of the Securities Act, from and against
any and all losses, claims, damages or liabilities (or actions in respect
thereof), joint or several, to which the Holder or such underwriter, broker or
dealer or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of
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any material fact contained in any registration statement under which such
Shares were registered under the Securities Act, any preliminary prospectus or
final prospectus relating to such Shares, or any amendment or supplement
thereto, or arise out of or are based upon the 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 under the Securities Act applicable to the Company or
relating to any action or inaction required by the Company in connection with
any such registration and will reimburse the Holder, each such underwriter,
broker or dealer and controlling Person, and their respective directors,
officers or employees, for any legal or other expenses reasonably incurred by
any such Person in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability are found in a final non appealable
judgment by a court to have arisen out of or to have been based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, such preliminary prospectus, such final prospectus
or such amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by the Holder or such underwriter,
broker, dealer or controlling Person for use in the preparation thereof.
(ii) Upon the filing of the Registration Statement,
each Holder, severally and not jointly, agrees to indemnify and hold harmless
the Company from and against any and all losses, claims, damages or liabilities
(or actions in respect thereof) to which the Company may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (A)
any untrue statement or alleged untrue statement of any material fact which was
provided by such Holder to the Company and is contained in any registration
statement under which such Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus relating to such Shares, or any
amendment or supplement thereto, or (B) the omission or alleged omission to
state in any registration statement a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (C) any
violation by such Holder of any rule or regulation under the Securities Act
applicable to the Holder or relating to any action or inaction required by the
Holder in connection with any such registration, and such Holder will reimburse
the Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that such
Holder will not be liable in any such case to the extent that any such loss,
claim, damage or liability is found in a final non-appealable judgment by a
court not to have arisen out of or not to have been based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, such preliminary prospectus, such final prospectus
or such amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by the Holder.
(c) Procedure. (i) Any party entitled to indemnification under
this Section 15.3 (an "Indemnified Party") will give written notice to the party
which is required to indemnify it (the "Indemnifying Party") of any matters
giving rise to a claim for indemnification; provided, that the failure of any
party entitled to indemnification hereunder to give notice as provided herein
shall
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not relieve the Indemnifying Party of its obligations under this Section 15.3
except to the extent that the Indemnifying Party is actually prejudiced by such
failure to give notice.
(ii) In case any action, proceeding or claim is
brought against an Indemnified Party in respect of which indemnification is
sought hereunder, the Indemnifying Party shall be entitled to participate in
and, unless in the reasonable judgment of the Indemnified Party a conflict of
interest between it and the Indemnifying Party may exist with respect of such
action, proceeding or claim, to assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Party. In the event that the
Indemnifying Party advises an Indemnified Party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the Indemnified Party may, at its option, defend,
settle or otherwise compromise or pay such action or claim.
(iii) In any event, unless and until the Indemnifying
Party elects in writing to assume and does so assume the defense of any such
claim, proceeding or action, the Indemnified Party's costs and expenses arising
out of the defense, settlement or compromise of any such action, claim or
proceeding shall be losses subject to indemnification hereunder. The Indemnified
Party shall cooperate fully with the Indemnifying Party in connection with any
negotiation or defense of any such action or claim by the Indemnifying Party and
shall furnish to the Indemnifying Party all information reasonably available to
the Indemnified Party which relates to such action or claim. The Indemnifying
Party shall keep the Indemnified Party fully apprized at all times as to the
status of the defense or any settlement negotiations with respect thereto.
(iv) If the Indemnifying Party elects to defend any
such action or claim, then the Indemnified Party shall be entitled to
participate in such defense with counsel of its choice at its sole cost and
expense. Provided that the Indemnifying Party has timely assumed the defense of
any action, claim or proceeding, the Indemnifying Party shall not be liable for
any settlement of any action, claim or proceeding effected without its prior
written consent.
(v) Notwithstanding anything in this Section 15.3 to
the contrary, the Indemnifying Party shall not, without the Indemnified Party's
prior written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future obligation on the
Indemnified Party or which does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to the Indemnified Party of a
release from all liability in respect of such claim. The indemnification
required by this Section 15.3 shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the
Indemnified Party irrevocably agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party was not entitled
to indemnification. The indemnity agreements contained herein shall be in
addition to (A) any cause of action or similar rights of the Indemnified Party
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against the Indemnifying Party or others, and (B) any liabilities the
indemnifying party may be subject to pursuant to the law.
(d) Contribution. If the indemnification provided for in this
Section 15.3 is unavailable to the Indemnified Party, in respect of any losses,
claims, damages or liabilities referred to herein, then the Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnifying Party as a result of such losses, claims,
damages or liabilities (A) as between the Indemnifying Party and the Indemnified
Parties in such proportion as is appropriate to reflect the relative benefits
received by the Indemnifying and Indemnified Parties from the offering of the
Shares, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Indemnifying and Indemnified Parties in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations and (B)
as between the Indemnifying and Indemnified Parties in such proportion as is
appropriate to reflect the relative fault of such parties in connection with
such statements or omissions, as well as any other relevant equitable
considerations.
(e) Survival of Indemnification. The indemnity and
contribution agreements contained in this Section 15.3 shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of any Indemnified or Indemnifying Party or the consummation of the sale
or successive resales of the Shares or the Warrants.
15.4. Successors and Assigns. Subject to compliance with the
provisions of Section 3.1, this Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors of the Company and
the successors and assigns of the Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant,
and shall be enforceable by any such Holder.
15.5. Amendment. This Warrant may be modified or amended or
the provisions of this Warrant waived with the written consent of the Company
and the Holder.
15.6. Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be modified to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
15.7. Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant
15.8. Governing Law. This Warrant and the transactions
contemplated hereby shall be deemed to be consummated in the State of New York
and shall be governed by and interpreted in accordance with the local laws
thereof without regard to the provisions thereof relating to conflict of
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laws. The Company and each Holder hereby irrevocably consents to the exclusive
jurisdiction of the State and Federal courts located in New York City, New York,
in connection with any action or proceeding arising out of or relating to this
Warrant. In any such litigation the Company and each Holder waives personal
service of any summons, complaint or other process and agrees that the service
thereof may be made by certified or registered mail directed at its address set
forth in Section 15.2. Within 30 days after such mailing, the party so served
shall appear or answer to such summons, complaint or other process. Should the
party so served fail to appear or answer within said 30-day period, such party
shall be deemed in default and judgment may be entered against such party for
the amount as demanded in any summons, complaint or other process so served.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, Alteon Inc. has caused this Warrant to be
executed by its duly authorized officer and attested by its Secretary.
ALTEON INC.
Dated: ___________________, 2000 By: /S/ βββββββ β. ββββ
----------------------------------------
βββββββ β. ββββ, President and Chief
Executive Officer
Attest:
By: /S/ βββββββββ O'Dell
-------------------------------
Name: βββββββββ O'Dell
Title: Secretary
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant exercises this Warrant for the
purchase of shares of Common Stock of, and herewith makes payment therefor, all
at the price and on the terms and conditions specified in this Warrant and
requests that certificates for the shares of Common Stock hereby purchased (and
any securities or other-property issuable upon such exercise) be issued in the
name of and delivered to and whose address is . [And, if such shares
of Common Stock shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Common Stock issuable hereunder be delivered to the
undersigned.]
(Name of Registered Owner)
(Signature of Registered Owner)
(Street Address)
(State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of shares of
common Stock set forth below:
Name and Address of Assignee
No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint _______________
attorney-in-fact to register such transfer on the books of the Company,
maintained for the purpose, with full power of substitution in the premises.
Dated: _______________________________________________
Print Name: __________________________________________
Signature: ___________________________________________
Witness: _____________________________________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the Warrant in every particular, without alteration or
enlargement or any change whatsoever.
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