COMMON SHARE PURCHASE WARRANT INTELLIPHARMACEUTICS INTERNATIONAL INC.
EXHIBIT
99.2
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Warrant
Shares: _______
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Issue
Date: ______, 2018
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Initial
Exercise Date: _______, 2018
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THIS
COMMON SHARE PURCHASE WARRANT (the “Warrant”) certifies that,
for value received, _____________ or its assigns (the
“Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date
hereof (the “Initial
Exercise Date”) and on or prior to 5:00 p.m. (New York
City time) on ______________1 (the “Termination Date”) but
not thereafter, to subscribe for and purchase from
Intellipharmaceutics International Inc., a Canadian corporation
(the “Company”), up to ______
Common Shares (as subject to adjustment hereunder, the
“Warrant
Shares”). The purchase price of one Common Share under
this Warrant shall be equal to the Exercise Price, as defined in
Section 2(b). This
Warrant is issued pursuant to the Registration Statement which
Registration Statement also registers the Warrant Shares issuable
upon exercise of this Warrant.
Section 1. Definitions. In addition to the
terms defined elsewhere in this Warrant, the following terms have
the meanings indicated in this Section 1:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.
“Bid Price” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Shares are then listed or quoted on
a Trading Market, the bid price of the C Common Shares for the time
in question (or the nearest preceding date) on the Trading Market
on which the Common Shares are then listed or quoted as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b) if OTCQB
or OTCQX is not a Trading Market, the volume weighted average price
of the Common Shares for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Shares are not
then listed or quoted for trading on OTCQB or OTCQX and if prices
for the Common Shares are then reported in the “Pink
Sheets” published by OTC Markets Group, Inc. (or a similar
organization or agency succeeding to its functions of reporting
prices), the most recent bid price per Common Share so reported, or
(d) in all other cases, the fair market value of a Common
Share as determined by an independent appraiser selected in good
faith by the holders of a majority in interest of the Warrants then
outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“Commission” means the
United States Securities and Exchange Commission.
“Common Share” means the
common share of the Company, no par value, and any other class of
securities into which such securities may hereafter be reclassified
or changed.
“Common Share Equivalents”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Shares,
including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Shares.
1 The date that
is the [ ] year anniversary of the Initial Exercise Date, provided
that, if such date is not a Trading Day, insert the immediately
following Trading Day.
1
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Registration
Statement”
means the Company’s registration statement on Form F-1 (File
No. 333-227448).
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Trading Day” means a day
on which the Common Shares are traded on a Trading
Market.
“Trading Market” means any
of the following markets or exchanges on which the Common Shares
are listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market or the New York Stock Exchange or the
OTC Bulletin Board (or any successors to any of the
foregoing).
“Transfer Agent” means AST
Trust Company (Canada) with offices located at ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇
and American Stock Transfer & Trust Company LLC with
offices located at ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and any
successor transfer agent of the Company.
“Underwriting Agreement”
means that certain underwriting agreement entered into by and
between ▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Co., LLC and the Company, dated as of
[___], 2018.
“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Shares are then listed or quoted on
a Trading Market, the daily volume weighted average price of the
Common Shares for such date (or the nearest preceding date) on the
Trading Market on which the Common Shares are then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if OTCQB or OTCQX is not a Trading Market, the volume
weighted average price of the Common Shares for such date (or the
nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the
Common Shares are not then listed or quoted for trading on OTCQB or
OTCQX and if prices for the Common Shares are then reported in the
“Pink Sheets” published by OTC Markets Group, Inc. (or
a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per Common Share so
reported, or (d) in all other cases, the fair market value of
a Common Share as determined by an independent appraiser selected
in good faith by the holders of a majority in interest of the
Warrants then outstanding and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the
Company.
“Warrants” means this
Warrant and other Common Share purchase warrants issued by the
Company pursuant to the Registration Statement.
Section 2. Exercise.
a) Exercise
of Warrant. Exercise of the purchase rights represented by
this Warrant may be made, in whole or in part, at any time or times
on or after the Initial Exercise Date and on or before the
Termination Date by delivery to the Company of a duly executed
facsimile copy or PDF copy submitted by e-mail (or e-mail
attachment) of the Notice of Exercise in the form annexed hereto
(the “Notice of
Exercise”). Within the earlier of (i) two (2) Trading
Days and (ii) the number of Trading Days comprising the Standard
Settlement Period (as defined in Section 2(d)(i) herein) following
the date of exercise as aforesaid, the Holder shall deliver the
aggregate Exercise Price for the Warrant Shares specified in the
applicable Notice of Exercise by wire transfer or cashier’s
check drawn on a United States bank unless the cashless exercise
procedure specified in Section 2(c) below is specified in the
applicable Notice of Exercise. No ink-original Notice of Exercise
shall be required, nor shall any medallion guarantee (or other type
of guarantee or notarization) of any Notice of Exercise be
required. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant
to the Company until the Holder has purchased all of the Warrant
Shares available hereunder and the Warrant has been exercised in
full, in which case, the Holder shall
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surrender this
Warrant to the Company for cancellation within three (3) Trading
Days of the date on which the final Notice of Exercise is delivered
to the Company. Partial exercises of this Warrant resulting in
purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise
within one (1) Trading Day of receipt of such
notice. The Holder and any
assignee, by acceptance of this Warrant, acknowledge and agree
that, by reason of the provisions of this paragraph, following the
purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given
time may be less than the amount stated on the face
hereof.
b) Exercise
Price. The exercise price per Common Share under this
Warrant shall be $_____, subject to adjustment hereunder
(the “Exercise
Price”).
c) Cashless
Exercise. If at the time of exercise hereof there is no
effective registration statement registering, or the prospectus
contained therein is not available for the issuance of the Warrant
Shares to the Holder, then this Warrant may also be exercised, in
whole or in part, at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a
number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:
(A) =
as applicable: (i) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise if such
Notice of Exercise is (1) both executed and delivered pursuant to
Section 2(a) hereof on a day that is not a Trading Day or (2) both
executed and delivered pursuant to Section 2(a) hereof on a Trading
Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(64) of Regulation NMS promulgated under the
federal securities laws) on such Trading Day, (ii) at the option of
the Holder, either (y) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise or (z) the
Bid Price of the Common Shares on the principal Trading Market as
reported by Bloomberg L.P. as of the time of the Holder’s
execution of the applicable Notice of Exercise if such Notice of
Exercise is executed during “regular trading hours” on
a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular
trading hours” on a Trading Day) pursuant to Section 2(a)
hereof or (iii) the VWAP on the date of the applicable Notice of
Exercise if the date of such Notice of Exercise is a Trading Day
and such Notice of Exercise is both executed and delivered pursuant
to Section 2(a) hereof after the close of “regular trading
hours” on such Trading Day;
(B) =
the Exercise Price of this Warrant, as adjusted hereunder;
and
(X) =
the number of Warrant Shares that
would be issuable upon exercise of this Warrant in accordance with
the terms of this Warrant if such exercise were by means of a cash
exercise rather than a cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the
parties acknowledge and agree that in accordance with Section
3(a)(9) of the Securities Act, the Warrant Shares shall take on the
registered characteristics of the Warrants being
exercised. The Company agrees not to take any position
contrary to this Section 2(c).
d) Mechanics
of Exercise.
i. Delivery
of Warrant Shares Upon Exercise. The Company shall cause the
Warrant Shares purchased hereunder to be transmitted by the
Transfer Agent to the Holder by crediting the account of the
Holder’s or its designee’s balance account with The
Depository Trust Company through its Deposit or Withdrawal at
Custodian system (“DWAC”) if the Company is
then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by the Holder or
(B) this Warrant is being exercised via cashless exercise, and
otherwise by physical delivery of a certificate or book entry
notation, registered in the Company’s share register in the
name of the Holder or its designee, for the number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to
the address specified by the Holder in the Notice of Exercise by
the date that is the earliest of (i) two (2) Trading Days (ii) the
number of days comprising the Standard Settlement Period, in each
case after the delivery to the Company of the Notice of Exercise
and (iii) one (1) Trading Day after delivery of the aggregate
Exercise Price to the Company (such date, the “Warrant Share Delivery
Date”). Upon delivery of the Notice of Exercise, the
Holder
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shall
be deemed for all corporate purposes to have become the holder of
record of the Warrant Shares with respect to which this Warrant has
been exercised, irrespective of the date of delivery of the Warrant
Shares, provided that payment of the aggregate Exercise Price
(other than in the case of a cashless exercise) is received by the
Warrant Share Delivery Date. If the Company fails for any reason to
deliver to the Holder the Warrant Shares subject to a Notice of
Exercise by the Warrant Share Delivery Date, the Company shall pay
to the Holder, in cash, as liquidated damages and not as a penalty,
for each $1,000 of Warrant Shares subject to such exercise (based
on the VWAP of the Common Shares on the date of the applicable
Notice of Exercise), $10 per Trading Day (increasing to $20 per
Trading Day on the fifth (5th) Trading Day after
such liquidated damages begin to accrue) for each Trading Day after
such Warrant Share Delivery Date until such Warrant Shares are
delivered or the Holder rescinds such exercise. The Company agrees
to maintain a transfer agent that is a participant in the FAST
program so long as this Warrant remains outstanding and
exercisable. As used herein, “Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Shares as in
effect on the date of delivery of the Notice of
Exercise.
ii. Delivery
of New Warrants Upon Exercise. If this Warrant shall have
been exercised in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant certificate, at the time
of delivery of the Warrant Shares, deliver to the Holder a new
Warrant evidencing the rights of the 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.
iii. Rescission
Rights. In the event that the Buy-In remedy pursuant to
Section 2(d)(iv) does not apply or is otherwise not exercised, if
the Company fails to cause the Transfer Agent to transmit to the
Holder the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date, then the Holder will have the right to
rescind such exercise.
iv. Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon
Exercise. In addition to any other rights available to the
Holder, if the Company fails to cause the Transfer Agent to
transmit to the Holder the Warrant Shares in accordance with the
provisions of Section 2(d)(i) above pursuant to an exercise on or
before the Warrant Share Delivery Date, and if after such date the
Holder is required by its broker to purchase (in an open market
transaction or otherwise) or the Holder’s brokerage firm
otherwise purchases, Common Shares to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the Common Shares so purchased
exceeds (y) the amount obtained by multiplying (1) the number of
Warrant Shares that the Company was required to deliver to the
Holder in connection with the exercise at issue times (2) the price
at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for
which such exercise was not honored (in which case such exercise
shall be deemed rescinded) or deliver to the Holder the number of
Common Shares that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. For
example, if the Holder purchases Common Shares having a total
purchase price of $11,000 to cover a Buy-In with respect to an
attempted exercise of Common Shares with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause
(A) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a
▇▇▇▇▇▇’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver Common
Shares upon exercise of the Warrant as required pursuant to the
terms hereof.
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v. No
Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of
this Warrant. As to any fraction of a share which the Holder would
otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of
such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole
share.
vi. Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made
without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Warrant
Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the
Holder or in such name or names as may be directed by the
Holder; provided, however, that in the event that
Warrant Shares are to be issued in a name other than the name of
the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by
the Holder and the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto. The Company shall pay all Transfer Agent fees
required for same-day processing of any Notice of Exercise and all
fees to the Depository Trust Company (or another established
clearing corporation performing similar functions) required for
same-day electronic delivery of the Warrant Shares.
vii. Closing
of Books. The Company will not close its shareholder books
or records in any manner which prevents the timely exercise of this
Warrant, pursuant to the terms hereof.
e) ▇▇▇▇▇▇’s
Exercise Limitations. The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise,
the Holder (together with the Holder’s Affiliates, and any
other Persons acting as a group together with the Holder or any of
the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of Common Shares beneficially owned by the
Holder and its Affiliates and Attribution Parties shall include the
number of Common Shares issuable upon exercise of this Warrant with
respect to which such determination is being made, but shall
exclude the number of Common Shares which would be issuable upon
(i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates or
Attribution Parties and (ii) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the
Company (including, without limitation, any other Common Share
Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by
the Holder or any of its Affiliates or Attribution Parties.
Except as set forth in the preceding sentence, for purposes of this
Section 2(e), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder, it being acknowledged by the
Holder that the Company is not representing to the Holder that such
calculation is in compliance with Section 13(d) of the Exchange Act
and the Holder is solely responsible for any schedules required to
be filed in accordance therewith. To the extent that the limitation
contained in this Section 2(e) applies, the determination of
whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates and
Attribution Parties) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the
submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with
any Affiliates and Attribution Parties) and of which portion of
this Warrant is exercisable, in each case subject to the Beneficial
Ownership Limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. In addition,
a determination as to any group status as contemplated above shall
be determined in accordance with Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder. For purposes
of this Section 2(e), in determining the number of outstanding
Common Shares, a Holder may rely on the number of outstanding
Common Shares as reflected in (A) the
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Company’s
most recent periodic or annual report filed with the Commission, as
the case may be, (B) a more recent public announcement by the
Company or (C) a more recent written notice by the Company or the
Transfer Agent setting forth the number of Common Shares
outstanding. Upon the written or oral request of a Holder,
the Company shall within one (1) Trading Day confirm orally and in
writing to the Holder the number of Common Shares then
outstanding. In any case, the number of outstanding Common
Shares shall be determined after giving effect to the conversion or
exercise of securities of the Company, including this Warrant, by
the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding Common Shares was reported.
The “Beneficial
Ownership Limitation” shall be [4.99%/9.99%] of the
number of Common Shares outstanding immediately after giving effect
to the issuance of Common Shares issuable upon exercise of this
Warrant. The Holder, upon notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in
no event exceeds 9.99% of the number of Common Shares outstanding
immediately after giving effect to the issuance of Common Shares
upon exercise of this Warrant held by the Holder and the provisions
of this Section 2(e) shall continue to apply. Any increase in the
Beneficial Ownership Limitation will not be effective until the
61st day after such
notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2(e) to
correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.
Section 3. Certain
Adjustments.
a) Stock
Dividends and Splits. If the Company, at any time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on its Common Shares or any
other equity or equity equivalent securities payable in Common
Shares (which, for avoidance of doubt, shall not include any Common
Shares issued by the Company upon exercise of this Warrant), (ii)
subdivides outstanding Common Shares into a larger number of
shares, (iii) combines (including by way of reverse stock split)
outstanding Common Shares into a smaller number of shares, or (iv)
issues by reclassification of Common Shares any shares of capital
stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number
of Common Shares (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be
the number of Common Shares outstanding immediately after such
event, and the number of shares issuable upon exercise of this
Warrant shall be proportionately adjusted such that the aggregate
Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination
of shareholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in
the case of a subdivision, combination or
re-classification.
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b) Subsequent
Rights Offerings. In addition to any adjustments pursuant to
Section 3(a) above, if at any time the Company grants, issues or
sells any Common Share Equivalents or rights to purchase stock,
warrants, securities or other property pro rata to the record
holders of any class of Common Shares (the “Purchase Rights”), then
the Holder will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of
Common Shares acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common
Shares are to be determined for the grant, issue or sale of such
Purchase Rights (provided, however, to the extent that the
Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
Common Shares as a result of such Purchase Right to such extent)
and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would
not result in the Holder exceeding the Beneficial Ownership
Limitation).
c) Pro
Rata Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of Common Shares, by way of return of capital or
otherwise (including, without limitation, any distribution of cash,
stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a
“Distribution”), at any
time after the issuance of this Warrant, then, in each such case,
the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if
the Holder had held the number of Common Shares acquirable upon
complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of Common
Shares are to be determined for the participation in such
Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
Common Shares as a result of such Distribution to such extent) and
the portion of such Distribution shall be held in abeyance for the
benefit of the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation). To the extent that this Warrant has not been
partially or completely exercised at the time of such Distribution,
such portion of the Distribution shall be held in abeyance for the
benefit of the Holder until the Holder has exercised this
Warrant.
d) Fundamental
Transaction. If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of
the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii)
any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Shares are permitted to sell,
tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the
outstanding Common Shares, (iv) the Company, directly or
indirectly, in one or more related transactions effects any
reclassification, reorganization or recapitalization of the Common
Shares or any compulsory share exchange pursuant to which the
Common Shares are effectively converted into or exchanged for other
securities, cash or property, or (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person or group of
Persons whereby such other Person or group acquires more than 50%
of the outstanding Common Shares (not including any Common Shares
held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business
combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the
number of Common Shares of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any
additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of Common Shares for which this Warrant is
exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise
of this Warrant). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one Common Share in
such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Shares are given
any choice as to the securities, cash or property to be received in
a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction.
Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction, the Company or any Successor Entity (as
defined below) shall, at the Holder’s option, exercisable at
any time concurrently with, or within thirty (30) days after, the
consummation of the Fundamental Transaction (or, if later, the date
of the public announcement of the applicable Fundamental
Transaction), purchase this Warrant from the Holder by paying to
the Holder an amount of cash equal to the Black Scholes Value (as
defined below) of the remaining unexercised portion of this Warrant
on the date of the consummation of such Fundamental
Transaction; provided, however, if the Fundamental
Transaction is not within the Company's control, including not
approved by the Company's Board of Directors, the
Holder
7
shall
only be entitled to receive from the Company or any Successor
Entity, as of the date of consummation of such Fundamental
Transaction, the same type or form of consideration (and in the
same proportion), at the Black Scholes Value (as defined below) of
the unexercised portion of this Warrant, that is being offered and
paid to the holders of Common Shares of the Company in connection
with the Fundamental Transaction, whether that consideration be in
the form of cash, stock or any combination thereof, or whether the
holders of Common Shares are given the choice to receive from among
alternative forms of consideration in connection with the
Fundamental Transaction. “Black Scholes Value”
means the value of this Warrant based on the Black and Scholes
Option Pricing Model obtained from the “OV” function on
Bloomberg, L.P. (“Bloomberg”) determined as
of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period
equal to the time between the date of the public announcement of
the applicable Fundamental Transaction and the Termination Date,
(B) an expected volatility equal to the greater of one hundred
(100%) percent and the one hundred (100) day volatility obtained
from the HVT function on Bloomberg as of the Trading Day
immediately following the public announcement of the applicable
Fundamental Transaction, (C) the underlying price per share used in
such calculation shall be the greater of (i) the sum of the price
per share being offered in cash, if any, plus the value of any
non-cash consideration, if any, being offered in such Fundamental
Transaction and (ii) the greater of (x) the last VWAP immediately
prior to the public announcement of such Fundamental Transaction
and (y) the last VWAP immediately prior to the consummation of such
Fundamental Transaction and (D) a remaining option time equal to
the time between the date of the public announcement of the
applicable Fundamental Transaction and the Termination Date. The
payment of the Black Scholes Value will be made by wire transfer of
immediately available funds (or by delivery of such other
consideration, as applicable) within five (5) Business Days of the
Holder’s election (or, if later, on the effective date of the
Fundamental Transaction). The Company shall cause any successor
entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this
Warrant in accordance with the provisions of this Section 3(d)
pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without
unreasonable delay) prior to such Fundamental Transaction and
shall, at the option of the Holder, deliver to the Holder in
exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and
substance to this Warrant which is exercisable for a corresponding
number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the Common Shares acquirable and
receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such
Fundamental Transaction, and with an exercise price which applies
the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the Common Shares
pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and
such exercise price being for the purpose of protecting the
economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Warrant referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the
Company under this Warrant with the same effect as if such
Successor Entity had been named as the Company herein.
e) Calculations.
All calculations under this Section 3 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 3, the number of Common Shares deemed to
be issued and outstanding as of a given date shall be the sum of
the number of Common Shares (excluding treasury shares, if any)
issued and outstanding.
8
f) Notice
to Holder.
i. Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall
promptly deliver to the Holder by facsimile or email a notice
setting forth the Exercise Price after such adjustment and any
resulting adjustment to the number of Warrant Shares and setting
forth a brief statement of the facts requiring such
adjustment.
ii. Notice
to Allow Exercise by ▇▇▇▇▇▇. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on
the Common Shares, (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Shares,
(C) the Company shall authorize the granting to all holders of the
Common Shares 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 shareholders of the Company shall be required in
connection with any reclassification of the Common Shares, any
consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Common Shares
are converted into other securities, cash or property, or (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 delivered by facsimile or
email to the Holder at its last facsimile number or email address
as it shall appear upon the Warrant Register of the Company, 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 Shares
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Shares of record shall be entitled to exchange their Common
Shares for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange; provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice provided in this Warrant
constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Report on Form 6-K. The Holder shall remain entitled to exercise
this Warrant during the period commencing on the date of such
notice to the effective date of the event triggering such notice
except as may otherwise be expressly set forth herein.
9
Section 4. Transfer of
Warrant.
a) Transferability.
This Warrant and all rights hereunder (including, without
limitation, any registration rights) are transferable, in whole or
in part, upon surrender of this Warrant at the principal office of
the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached
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, as applicable,
and in the denomination or denominations 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 cancelled. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within two (2) Trading Days
of the date on which the Holder delivers an assignment form to the
Company assigning this Warrant in full. The Warrant, if properly
assigned in accordance herewith, may be exercised by a new holder
for the purchase of Warrant Shares without having a new Warrant
issued.
b) New
Warrants. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office 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
4(a), 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. All Warrants issued on
transfers or exchanges shall be dated the Issue Date of this
Warrant and shall be identical with this Warrant except as to the
number of Warrant Shares issuable pursuant thereto.
c) Warrant
Register. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the
“Warrant
Register”), in the name of the record Holder hereof
from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for
all other purposes, absent actual notice to the
contrary.
Section 5. Miscellaneous.
a) No
Rights as Shareholder Until Exercise; No Settlement in Cash.
This Warrant does not entitle the Holder to any voting rights,
dividends or other rights as a shareholder of the Company prior to
the exercise hereof as set forth in Section 2(d)(i), except as
expressly set forth in Section 3. Without limiting the rights of a
Holder to receive Warrant Shares on a “cashless
exercise,” and to receive the cash payments contemplated
pursuant to Sections 2(d)(i) and 2(d)(iv), in no event will the
Company be required to net cash settle a Warrant
exercise.
b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate relating to the Warrant
Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then, such action may
be taken or such right may be exercised on the next succeeding
Business Day.
d) Authorized
Shares.
The
Company covenants that, during the period the Warrant is
outstanding, it will reserve from its authorized and unissued
Common Shares a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of issuing the necessary
Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which
the Common Shares may be listed. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
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Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its articles 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 Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will
(i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable
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.
Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise 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.
e) Jurisdiction.
All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the
State of New York, without regard to the principles of conflict of
laws thereof. Each party agrees that all legal proceedings
concerning the interpretation, enforcement and defense of this
Warrant shall be commenced in the state and federal courts sitting
in the City of New York, Borough of Manhattan (the
“New York
Courts”). Each party hereto hereby irrevocably submits
to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject
to the jurisdiction of such New York Courts, or such New York
Courts are improper or inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such
party at the address in effect for notices to it under this Warrant
and agrees that such service shall constitute good and sufficient
service of process and notice thereof. If either party shall
commence an action, suit or proceeding to enforce any provisions of
this Warrant, the prevailing party in such action, suit or
proceeding shall be reimbursed by the other party for their
reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of
such action or proceeding.
f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, and the Holder does
not utilize cashless exercise, will have restrictions upon resale
imposed by state and federal securities laws.
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g) Nonwaiver
and Expenses. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s
rights, powers or remedies. Without limiting any other provision of
this Warrant, if the Company willfully and knowingly fails to
comply with any provision of this Warrant, which results in any
material damages to the Holder, 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.
h) Notices.
Any and all notices or other communications or deliveries to be
provided by the Holders hereunder including, without limitation,
any Notice of Exercise, shall be in writing and delivered
personally, by facsimile or e-mail, or sent by a nationally
recognized overnight courier service, addressed to the Company, at
the address set forth above Attention: _________________, facsimile number
_______________, email address _______________, or such other
facsimile number, email address or address as the Company may
specify for such purposes by notice to the Holders. Any and all
notices or other communications or deliveries to be provided by the
Company hereunder shall be in writing and delivered personally, by
facsimile or email, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number,
email address or address of such ▇▇▇▇▇▇ appearing on the books of
the Company. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of
(i) the time of transmission, if such notice or communication is
delivered via facsimile or email at the facsimile number or email
address set forth in this Section prior to 5:30 p.m. (New York City
time) on any date, (ii) the next Trading Day after the time of
transmission, if such notice or communication is delivered via
facsimile or email at the facsimile number or email address set
forth in this Section on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (iii) the
second (2nd) Trading Day
following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be given. To the
extent that any notice provided hereunder constitutes, or contains,
material, non-public information regarding the Company or any
subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Report on Form 6-K.
i) Limitation
of Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the
Holder for the purchase price of any Common Shares or as a
shareholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
j) Remedies.
The Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company
agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive and not to assert the
defense in any action for specific performance that a remedy at law
would be adequate.
k) Successors
and Assigns. Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted
assigns of the Company and the successors and permitted assigns of
Holder. The provisions of this Warrant are intended to be for the
benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant
Shares.
l) Amendment.
This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the
Holder.
m) 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 ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the
remaining provisions of this Warrant.
12
n) 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.
(Signature Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
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NOTICE OF EXERCISE
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of
the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if
any.
(2)
Payment shall take the form of (check applicable box):
☐ in lawful money of the United States;
or
☐ if permitted the cancellation of such number of
Warrant Shares as is necessary, in accordance with the formula set
forth in subsection 2(c), to exercise this Warrant with respect to
the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection
2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or
in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
________________________________________________________________________
Signature of Authorized Signatory of Investing Entity:
_________________________________________________
Name of
Authorized Signatory:
___________________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________________
Date:
________________________________________________________________________________________
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EXHIBIT B
ASSIGNMENT
FORM
(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
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Dated:
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Holder’s
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