ALEXZA PHARMACEUTICALS, INC. WARRANT dated as of May ___, 2011
Exhibit 4.1
ALEXZA PHARMACEUTICALS, INC.
WARRANT
dated as of May ___, 2011
This Certifies That, for value received, [____________] or its successors or
permitted assigns (such Person and such successors and assigns each being the “Warrant Holder” with
respect to the Warrant (as herein defined) held by it), at any time and from time to time on or
after the six-month anniversary of the date of this Warrant and on or prior to the Expiration Date
(as herein defined), is entitled (a) to subscribe for the purchase from Alexza Pharmaceuticals,
Inc., a Delaware corporation (the “Company”), [__________] Shares (as herein defined) at a price
per Share equal to the Exercise Price (as herein defined), and (b) to the other rights set forth
herein; provided that the number of Shares issuable upon any exercise of this Warrant and the
Exercise Price shall be adjusted and readjusted from time to time in accordance with Section
4. By accepting delivery hereof, the Warrant ▇▇▇▇▇▇ agrees to be bound by the provisions
hereof.
This Warrant (the “Warrant”) is issued as part of a series of similar Warrants (collectively,
the “Warrants”) issued pursuant to that certain Securities Purchase Agreement, dated as of May 3,
2011, by and among the Company and the other parties identified therein (the “SPA”).
In Furtherance Thereof, the Company irrevocably undertakes and agrees for the benefit
of Warrant Holder as follows:
Section 1. Definitions and Construction.
(a) Certain Definitions. As used herein (the following definitions being applicable in
both singular and plural forms):
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly
controls, is controlled by, or is under common control with such Person.
“Appraised Value” means at any time the fair market value of a Share determined in good faith
by the Board of Directors of the Company as of a date which is within ten (10) days of the date as
of which the determination is to be made, subject to the rights of the Requisite Holders pursuant
to Section 4(j).
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks
in New York City are authorized by law to close.
“Closing Price” means, for any trading day with respect to a Share, (a) the last reported sale
price on such day on the principal national securities exchange on which the Shares are listed or
admitted to trading or, if no such reported sale takes place on any such day, the average of the
closing bid and asked prices thereon, as reported in The Wall Street Journal, or (b) if such Shares
shall not be listed or admitted to trading on a national securities exchange, the last reported
sales price on the NASDAQ National Market System or, if no such reported sale takes place on any
such day, the average of the closing bid and asked prices thereon, as reported in The Wall Street
Journal, or (c) if such Shares shall not be quoted on such National Market System nor listed or
admitted to trading on a national securities exchange, then the average of the closing bid and
asked prices, as reported by The Wall Street Journal for the over-the-counter market; provided that
if clause (a), (b), or (c) applies and no price is reported in The Wall
Street Journal for any trading day, then the price reported in The Wall Street Journal for the most
recent prior trading day shall be deemed to be the price reported for such trading day.
“Commission” means the Securities and Exchange Commission or any other Federal agency
administering the Securities Act at the time.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor Federal
statute, and the rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
“Exercise Amount” means for any number of Warrant Shares as to which this Warrant is being
exercised the product of (i) such number of Warrant Shares times (ii) the Exercise Price.
“Exercise
Price” means $1.755 per Warrant Share, as adjusted from time to time pursuant to
Section 4.
“Expiration Date” means May [___], 2016.
“Initial Holder” means [________________].
“Person” means an individual, a corporation, a partnership, an association, a trust or any
other entity or organization, including a government or political subdivision or an agency or
instrumentality thereof.
“Requisite Holders” means at any time holders of Warrants representing at least 75% of the
Warrant Shares issuable upon the exercise of all the outstanding Warrants.
“Securities Act” means the Securities Act of 1933, as amended, or any successor Federal
statute, and the rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
“Shares” means shares of the Company’s currently authorized common stock, $0.0001 par value,
and stock of any other class or other consideration into which such currently authorized common
stock may hereafter have been changed into.
“Warrant” means, as the context requires, this warrant and any successor warrant or warrants
issued upon a whole or partial transfer or assignment of any such Share purchase warrant or of any
such successor warrant.
“Warrant Shares” means the number of Shares issued or issuable upon exercise of this Warrant
as set forth in the introduction hereto, as adjusted from time to time pursuant to Section
4, or in the case of other Warrants, issuable upon exercise of those Warrants.
(b) Accounting Terms and Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles. When used herein, the term “financial
statements” shall include the notes and schedules thereto. References to fiscal periods are to
fiscal periods of the Company.
(c) Computation of Time Periods. With respect to the computation of periods of time
from a specified date to a later specified date, the word “from” means “from and including” and the
words “to” and “until” each mean “to but excluding.” Periods of days shall be counted in calendar
days unless otherwise stated.
(d) Construction. Unless the context requires otherwise, references to the plural
include the singular and to the singular include the plural, references to any gender include any
other gender, the part includes the whole, the term “including” is not limiting, and the term “or”
has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Warrant refer to
this Warrant as a whole and not to any particular provision of this Warrant. Section, subsection,
clause, exhibit, appendix and schedule references are to this Warrant, unless otherwise specified.
Any reference to this Warrant includes any and all permitted alterations, amendments, changes,
extensions, modifications, renewals, or supplements thereto or thereof, as applicable.
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(e) Exhibits and Schedules. All of the exhibits, appendices and schedules attached
hereto shall be deemed incorporated herein by reference.
(f) No Presumption Against Any Party. Neither this Warrant nor any uncertainty or
ambiguity herein or therein shall be construed or resolved using any presumption against any party
hereto or thereto, whether under any rule of construction or otherwise. On the contrary, this
Warrant has been reviewed by each of the parties and their counsel and, in the case of any
ambiguity or uncertainty, shall be construed and interpreted according to the ordinary meaning of
the words used so as to fairly accomplish the purposes and intentions of all parties hereto.
Section 2. Exercise of Warrant.
(a) Exercise and Payment. The Warrant Holder may exercise this Warrant in whole or in
part, at any time or from time to time on any Business Day on or prior to the Expiration Date, by
delivering to the Company a duly executed notice (a “Notice of Exercise”) in the form of
Exhibit A and by payment to the Company of the Exercise Amount, at the election of the
Warrant Holder, either (a) by wire transfer of immediately available funds to the account of the
Company in an amount equal to the Exercise Amount not later than three Business Days after the
Company receives the Notice of Exercise (a “Cash Exercise”), (b) by receiving from the Company the
number of Warrant Shares equal to (i) the number of Warrant Shares as to which this Warrant is
being exercised minus (ii) the number of Warrant Shares having a value, based on the Closing Price
on the trading day immediately prior to the date of such exercise (or if there is no such Closing
Price, then based on the Appraised Value as of such day), equal to the Exercise Amount (a “Cashless
Exercise”), or (c) by any combination of the foregoing. The Company acknowledges that the
provisions of clause (b) are intended, in part, to ensure that a full or partial exchange of this
Warrant pursuant to such clause (b) will qualify as a conversion, within the meaning of paragraph
(d)(3)(ii) of Rule 144 under the Securities Act. At the request of any Holder, the Company will
accept reasonable modifications to the exchange procedures provided for in this Section 2
in order to accomplish such intent. For all purposes of this Warrant (other than this Section
2(a)), any reference herein to the exercise of this Warrant shall be deemed to include a
reference to the exchange of this Warrant into Shares in accordance with the terms of clause (b).
(b) Effectiveness and Delivery. The Company shall confirm receipt of any Notice of
Exercise delivered pursuant to Section 2(a) within one Business Day of the receipt thereof.
As soon as practicable but not later than three Business Days after the Company shall have received
such Notice of Exercise, and provided that payment of the Exercise Amount for a Cash Exercise has
been received by the Company, the Company shall execute and deliver or cause to be executed and
delivered, in accordance with such Notice of Exercise, a certificate or certificates representing
the number of Shares specified in such Notice of Exercise, which shall take into account the
Exercise Price for a Cashless Exercise, issued in the name of the Warrant Holder or in such other
name or names of any Person or Persons designated in such Notice of Exercise. Without prejudice to
the holding periods determined under Rule 144 under the Securities Act, this Warrant shall be
deemed to have been exercised and such Share certificate or certificates shall be deemed to have
been issued, and the Warrant Holder or other Person or Persons designated in such Notice of
Exercise shall be deemed for all purposes to have become a holder of record of Shares, all as of
the date that such Notice of Exercise shall have been received by the Company.
(c) Surrender of Warrant. The Warrant Holder shall surrender this Warrant to the
Company within five Business Days after it delivers the Notice of Exercise, and in the event of a
partial exercise of the Warrant, the Company shall execute and deliver to the Warrant Holder, at
the time the Company delivers the Share certificate or certificates issued pursuant to such Notice
of Exercise, a new Warrant for the unexercised portion of the Warrant, but in all other respects
identical to this Warrant.
(d) Fractional Shares. The Company shall not be required to issue fractions of Shares
upon an exercise of the Warrant. If any fraction of a Share would, but for this restriction, be
issuable upon an exercise of the Warrant, in lieu of delivering such fractional Share, the Company
shall pay to the Warrant Holder, in
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cash, an amount equal to the same fraction times the Closing Price on the trading day immediately
prior to the date of such exercise (or if there is no such Closing Price, then based on the
Appraised Value as of such day).
(e) Expenses and Taxes. The Company shall pay all expenses, taxes and owner charges
payable in connection with the preparation, issuance and delivery of certificates for the Warrant
Shares and any new Warrants, except that if the certificates for the Warrant Shares or the new
Warrants are to be registered in a name or names other than the name of the Warrant Holder, funds
sufficient to pay all transfer taxes payable as a result of such transfer shall be paid by the
Warrant Holder at the time of its delivery of the Notice of Exercise or promptly upon receipt of a
written request by the Company for payment.
(f) Automatic Cashless Exercise. To the extent that the Closing Price on the trading
day immediately prior to the Expiration Date (or if there is no such Closing Price, then based on
the Appraised Value as of such day) is greater than the Exercise Price and there has not been an
exercise by the Warrant Holder pursuant to Section 2(a) hereof, any portion of the Warrant
that remains unexercised shall be exercised automatically in whole (not in part), upon the
Expiration Date. Payment by the Warrant Holder upon such automatic exercise shall be in the form of
the Warrant Holder receiving from the Company the number of Warrant Shares equal to (i) the number
of Warrant Shares as to which this Warrant is being automatically exercised minus (ii) the number
of Warrant Shares having a value, based on the Closing Price on the trading day immediately prior
to the date of such automatic exercise (or if there is no such Closing Price, then based on the
Appraised Value as of such day), equal to the Exercise Amount.
Section 3. Validity of Warrant and Issuance of Shares.
(a) The Company represents and warrants that this Warrant has been duly authorized, is validly
issued, and constitutes the valid and binding obligation of the Company and is enforceable against
the Company in accordance with its terms.
(b) The Company further represents and warrants that on the date hereof it has duly authorized
and reserved, and the Company hereby agrees that it will at all times until the Expiration Date
have duly authorized and reserved, such number of Shares as will be sufficient to permit the
exercise in full of the Warrant, and that all such Shares are and will be duly authorized and, when
issued upon exercise of the Warrant, will be validly issued, fully paid and non-assessable, and
free and clear of all security interests, claims, liens, equities and other encumbrances.
Section 4. Adjustment Provisions. The Exercise Price in effect at any time, and the
number of Warrant Shares that may be purchased upon any exercise of the Warrant, shall be subject
to change or adjustment as follows:
(a) Share Reorganization. If the Company shall subdivide its outstanding Shares into a
greater number of Shares, by way of a stock split, stock dividend or otherwise, or consolidate its
outstanding Shares into a smaller number of Shares (any such event being herein called a “Share
Reorganization”), then (i) the Exercise Price shall be adjusted, effective immediately after the
effective date of such Share Reorganization, to a price determined by multiplying the Exercise
Price in effect immediately prior to such effective date by a fraction, the numerator of which
shall be the number of Shares outstanding on such effective date before giving effect to such Share
Reorganization and the denominator of which shall be the number of Shares outstanding after giving
effect to such Share Reorganization, and (ii) the number of Shares subject to purchase upon
exercise of this Warrant shall be adjusted, effective at such time, to a number determined by
multiplying the number of Shares subject to purchase immediately before such Share Reorganization
by a fraction, the numerator of which shall be the number of Shares outstanding after giving effect
to such Share Reorganization and the denominator of which shall be the number of Shares outstanding
immediately before giving effect to such Share Reorganization.
(b) Special Distributions. If the Company shall issue or distribute to any holder or
holders of Shares evidences of indebtedness, any other securities of the Company or rights or
warrants to subscribe for or
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purchase any security of the Company or any cash, property or other assets (excluding a Share
Reorganization), whether or not accompanied by a purchase, redemption or other acquisition of
Shares (any such nonexcluded event being herein called a “Special Distribution”), then the Warrant
Holder shall be entitled to a pro-rata share of such Special Distribution as though the Warrant
Holder had fully exercised this Warrant immediately prior to the record date for such Special
Distribution, and the Company shall pay or distribute such pro-rata share to Warrant Holder when
paid or distributed to the holders of the Shares. A reclassification of the Shares (other than a
change in par value, or from par value to no par value or from no par value to par value) into
shares of any other class of stock shall be deemed to be a distribution by the Company to the
holders of its Shares of such class of stock and, if the outstanding Shares shall be changed into a
larger or smaller number of Shares as part of such reclassification, a Share Reorganization.
(c) Capital Reorganization. Without limiting any of the other provisions hereof, if
any (i) capital reorganization; (ii) reclassification of the capital stock of the Company; (iii)
merger, consolidation or reorganization or other similar transaction or series of related
transactions which results in the voting securities of the Company outstanding immediately prior
thereto representing immediately thereafter (either by remaining outstanding or by being converted
into voting securities of the surviving or acquiring entity) less than 50% of the combined voting
power of the voting securities of or economic interests in the Company or such surviving or
acquiring entity outstanding immediately after such merger, consolidation or reorganization; (iv)
sale, lease, license, transfer, conveyance or other disposition of all or substantially all of the
assets of the Company; (v) sale of shares of capital stock of the Company, in a single transaction
or series of related transactions, representing at least 50% of the voting power of the voting
securities of or economic interests in the Company; or (vi) the acquisition by any “person”
(together with his, her or its Affiliates) or “group” (within the meaning of Section 13(d) or 14(d)
of the Exchange Act) acquires, directly or indirectly, the beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of outstanding shares of capital stock
and/or other equity securities of the Company, in a single transaction or series of related
transactions (including, without limitation, one or more tender offers or exchange offers),
representing at least 50% of the voting power of or economic interests in the then outstanding
shares of capital stock of the corporation (each of (i)-(vi) above a “Corporate Reorganization”)
shall be effected, then the Company shall use its commercially reasonable efforts to ensure that
lawful and adequate provision shall be made whereby each Warrant Holder shall thereafter continue
to have the right to purchase and receive upon the basis and upon the terms and conditions herein
specified and in lieu of the Warrant Shares issuable upon exercise of the Warrants held by such
Warrant Holder, shares of stock in the surviving or acquiring entity (“Acquirer”), as the case may
be, such that the aggregate value of the Warrant Holder’s warrants to purchase such number of
shares, where the value of each new warrant to purchase one share in the Acquirer is determined in
accordance with the Black-Scholes Option Pricing formula set forth in Appendix A hereto, is
equivalent to the aggregate value of the Warrants held by such Warrant Holder, where the value of
each Warrant to purchase one share in the Company is determined in accordance with the
Black-Scholes Option Pricing formula set forth Appendix B hereto. Furthermore, the new
warrants to purchase shares in the Acquirer referred to herein shall have the same expiration date
as the Warrants, and shall have a strike price, KAcq, that is calculated in accordance
with Appendix A hereto. For the avoidance of doubt, if the surviving or acquiring entity,
as the case may be, is a member of a consolidated group for financial reporting purposes, the
parent of such consolidated group shall be deemed to be the Acquirer for purposes of this
Section 4(c) and Appendix A hereto.
Moreover, appropriate provision shall be made with respect to the rights and interests of each
Warrant Holder to the end that the provisions hereof (including, without limitation, provision for
adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be
practicable in relation to any shares of stock thereafter deliverable upon the exercise thereof.
The Company shall not effect any such Corporate Reorganization unless prior to or simultaneously
with the consummation thereof the successor corporation resulting from such consolidation or
merger, or the corporation purchasing or otherwise
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acquiring such assets or other appropriate corporation or entity shall assume by written
instrument, reasonably deemed by the Board of Directors of the Company and the Requisite Holders to
be satisfactory in form and substance, the obligation to deliver to the holder of the Warrants, at
the last address of such holder appearing on the books of the Company, such shares of stock, as, in
accordance with the foregoing provisions, such holder may be entitled to purchase, and the other
obligations under these Warrants. The provisions of this Section 4(c) shall similarly apply
to successive Corporate Reorganizations. If the Company, in spite of using its commercially
reasonable efforts, is unable to cause these Warrants to continue in full force and effect until
the Expiration Date in connection with any Corporate Reorganization, then the Company shall pay the
Warrant Holders an amount per Warrant to purchase one share in the Company that is calculated in
accordance with the Black-Scholes Option Pricing formula set forth in Appendix B hereto.
Such payment shall be made, promptly following the closing of the Corporate Reorganization, in cash
in the event that the Corporate Reorganization results in the stockholders of the Company receiving
cash from the Acquirer at the closing of the transaction, and shall be made in shares of the
Company (with the value of each share in the Company is determined according to SCorp in
Appendix B hereto) in the event that the Corporate Reorganization results in the
stockholders of the Company receiving shares in the Acquirer or other entity at the closing of the
transaction. In the event that the stockholders of the Company receive both cash and shares at the
closing of the transaction, such payment to the Warrant Holders shall be also be made in both cash
and shares in the same proportion as the consideration received by the stockholders.
(d) Adjustment Rules.
(i) Any adjustments pursuant to this Section 4 shall be made successively whenever any
event referred to herein shall occur, except that, notwithstanding any other provision of this
Section 4, no adjustment shall be made to the number of Warrant Shares to be delivered to
the Warrant Holder (or to the Exercise Price) if such adjustment represents less than 1% of the
number of Warrant Shares previously required to be so delivered, but any lesser adjustment shall be
carried forward and shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall amount to 1% or more of the number of
Warrant Shares to be so delivered.
(ii) No adjustments shall be made pursuant to this Section 4 in respect of the
issuance of Warrant Shares upon exercise of the Warrant;
(iii) If the Company shall take a record of the holders of its Shares for any purpose referred
to in this Section 4, then (x) such record date shall be deemed to be the date of the
issuance, sale, distribution or grant in question and (y) if the Company shall legally abandon such
action prior to effecting such action, no adjustment shall be made pursuant to this Section
4 in respect of such action.
(iv) In computing adjustments under this Section 4, (A) fractional interests in Shares
shall be taken into account to the nearest one-thousandth of a Share, and (B) calculations of the
Exercise Price shall be carried to the nearest one-thousandth of one cent.
(e) Proceedings Prior to Any Action Requiring Adjustment. As a condition precedent to
the taking of any action which would require an adjustment pursuant to this Section 4, the
Company shall take any action which may be necessary, including obtaining regulatory approvals or
exemptions, in order that the Company may thereafter validly and legally issue as fully paid and
nonassessable all Shares which the Warrant Holder is entitled to receive upon exercise of the
Warrant.
(f) Notice of Adjustment. Not less than 20 days prior to the record date or effective
date, as the case may be, of any action which requires or might require an adjustment or
readjustment pursuant to this Section 4, the Company shall give notice to the Warrant
Holder of such event, describing such event in reasonable detail and specifying the record date or
effective date, as the case may be, and, if determinable, the required adjustment and computation
thereof. If the required adjustment is not determinable as the time of such notice, the Company
shall give notice to the Warrant Holder of such adjustment and
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computation as soon as reasonably practicable after such adjustment becomes determinable. In
connection with any such adjustment or readjustment, at its sole cost and expense, the Company will
also cause independent certified public accountants of recognized national standing (which may be
the regular auditors of the Company) selected by the Company to verify its computations and confirm
that such computations were made in accordance with this Section 4 and, in connection with
the preparation of the Company’s quarterly financial statements prepare a report setting forth such
adjustment or readjustment and showing in reasonable detail the method of calculation thereof and
the facts upon which such adjustment or readjustment is based, including a statement of (i) the
number of Shares outstanding or deemed to be outstanding, and (ii) the Exercise Price in effect
immediately prior to such issue or sale and as adjusted and readjusted (if required by this
Section 4) on account thereof. The Company will forthwith mail a copy of each such report
to the Warrant Holder and will, upon the written request at any time of the Warrant Holder, furnish
to such holder a like report setting forth the Exercise Price at the time in effect and showing in
reasonable detail how it was calculated. The Company will also keep copies of all such reports at
its office and will cause the same to be available for inspection at such office during normal
business hours by the Warrant Holder or any prospective purchaser of this Warrant designated by the
Warrant Holder.
(g) Disputes. Any dispute which arises between the Warrant Holder and the Company with
respect to the calculation of the adjusted Exercise Price or Warrant Shares issuable upon exercise
shall be determined by the independent auditors of the Company in accordance with the terms of this
Warrant, and such determination shall be binding upon the Company and the holders of the Warrants
and the Warrant Shares if made in good faith and without manifest error.
(h) Other Actions Affecting Shares.
(i) Equitable Equivalent. In case any event shall occur as to which the provisions of
this Section 4 set forth above hereof are not strictly applicable but the failure to make
any adjustment would not, or if the application of the provisions of this Section 4
otherwise would not, in the opinion of the Warrant Holder, fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and principles of this
Section 4, then, in each such case, at the request of the Requisite Holders, the Company
shall appoint a firm of independent investment bankers of recognized national standing (which shall
be completely independent of the Company and shall be satisfactory to such Warrant Holders), which
shall give their opinion upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 4, necessary to preserve the purchase
rights of such Warrant Holder represented by this Warrant. Upon receipt of such opinion, the
Company will promptly mail a copy thereof to the holder of this Warrant and shall make the
adjustments described therein. The costs and expenses of such investment bankers shall be borne by
the Company.
(ii) No Avoidance. The Company shall not, by amendment of its certificate of
incorporation or bylaws or through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this Warrant against
dilution or other impairment as if the holder was a stockholder of the Company entitled to the
benefit of fiduciary duties afforded to stockholders under Delaware law.
(i) Adjustment of Par Value. If for any reason (including the operation of the
adjustment provisions set forth in this Warrant), the Exercise Price on any date of exercise of
this Warrant shall not be lawful and adequate consideration for the issuance of the relevant
Warrant Shares, then the Company shall take such steps as are necessary (including the amendment of
its certificate of incorporation so as to reduce the par value of the Shares) to cause such
Exercise Price to be adequate and lawful consideration on the date the payment thereof is due, but
if the Company shall fail to take such steps, then the Company acknowledges that the Warrant Holder
shall have been damaged by the Company in an amount equal to an amount, that,
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when added to the total Exercise Price for the relevant Warrant Shares, would equal lawful and
adequate consideration for the issuance of such Warrant Shares, and the Company irrevocably agrees
that if the Warrant Holder shall then forgive the right to recover such damages from the Company,
such forgiveness shall constitute, and Company shall accept such forgiveness as, additional lawful
consideration for the issuance of the relevant Warrant Shares.
(j) Appraisal.
(i) If the Requisite Holders shall, for any reason whatsoever, disagree with the Company’s
determination of the Appraised Value of a Share, then such holders shall by notice to the Company
(an “Appraisal Notice”) given within sixty (60) days after the Company notifies the holders of such
determination, elect to dispute such determination, and such dispute shall be resolved as set forth
in clause (ii) of this Section.
(ii) The Company shall within ten (10) days after an Appraisal Notice has been given, engage
an independent investment bank of national repute (the “Appraiser”) selected by the Requisite
Holders and retained pursuant to an engagement letter between the Company and the Appraiser with
respect to such valuation in form and substance reasonably acceptable to Requisite Holders, to make
an independent determination of the Appraised Value of a Share; such value shall be determined
without deduction for (a) liquidity considerations, (b) minority stockholder status, or (c) any
liquidation or other preference or any right of redemption in favor of any other equity securities
of the Company. The costs of engagement of such investment bank for any such determination of
Appraised Value shall be paid by the Company.
Section 5. Restrictions on Exercise. The Company shall provide to the Warrant Holder
prompt written notice of any time that the Company is unable to issue the Warrant Shares via DTC
transfer (or otherwise without restrictive legend), because (A) the Commission has issued a stop
order with respect to the Registration Statement on Form S-3 (File No. 333-166514) (the
“Registration Statement”), (B) the Commission otherwise has suspended or withdrawn the
effectiveness of the Registration Statement, either temporarily or permanently, or (C) the
Registration Statement is otherwise not then effective (each a “Restrictive Legend Event”);
provided, however, that notwithstanding the foregoing, the Company shall use best efforts to keep a
registration statement covering the issuance or resale of the Warrant Shares effective until the
earliest of (i) the time that this Warrant has expired and (ii) the exercise in full of this
Warrant. To the extent that a Restrictive Legend Event occurs after the Warrant Holder has
exercised this Warrant but prior to the delivery of the Warrant Shares, the Company shall promptly
inform the Warrant Holder thereof and the Warrant Holder may, at its election, (i) if the average
Closing Price of the Shares over the last five consecutive trading days is greater than the
Exercise Price, provide written notice to the Company to, and the Company shall promptly following
the receipt of such notice, deliver that number of Warrant Shares to the Warrant Holder as should
be delivered in a Cashless Exercise in accordance with clause (b) of Section 2(a), and the
Company shall promptly return to the Warrant Holder all consideration paid to the Company in
connection with the Warrant ▇▇▇▇▇▇’s attempted exercise of this Warrant (a “Company-Elected
Conversion”), or (ii) rescind the previously submitted Notice of Exercise and the Company shall
return all consideration paid by Warrant Holder for such shares upon such rescission. The Company
shall provide to the Warrant Holder prompt written notice of the termination of the Restrictive
Legend Event. If a Restricted Legend Event is occurring as of the Expiration Date, the term of this
Warrant shall be extended until the fifth (5th) business day after the termination of
such Restricted Legend Event.
The Warrant Holder understands that if the Company does not file reports pursuant to either
Section 13(a) or Section 15(d) of the Exchange Act, or if a registration statement covering this
Warrant or the Warrant Shares, as applicable, is not in effect when it desires to sell (i) the
rights to purchase Shares pursuant to this Warrant or (ii) the Shares issuable upon exercise of the
right to purchase, the Warrant Holder may be required to hold such securities for an indefinite
period. The Warrant Holder also understands that any sale of (A) its rights hereunder to purchase
Shares or (B) Shares issued or issuable
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hereunder that might be made by it in reliance upon Rule 144 under the Securities Act may be made
only in accordance with the terms and conditions of Rule 144. The Warrant Holder hereby
acknowledges and agrees that if a registration statement under the Securities Act covering the
Warrant Shares is not effective at the time this Warrant is exercised, the Warrant Holder shall
only be permitted to exercise this Warrant by means of a net issuance pursuant to clause (b) of
Section 2(a). For the avoidance of doubt, the Warrant ▇▇▇▇▇▇’s understandings and
acknowledgements set forth above shall in no way affect or limit the Company’s covenants and
obligations under the SPA or this Warrant, including, without limitation, its obligations to file
reports under the Exchange Act and maintain the effectiveness of a registration statement covering
the issuance or resale of the Warrant Shares, nor the Warrant Holder’s rights with respect to a
breach of such covenants and obligations.
Section 6. Transfer of Warrant. The Warrant Holder upon transfer of the Warrant must
deliver to the Company a duly executed Warrant Assignment in the form of Exhibit B and upon
surrender of this Warrant to the Company, the Company shall execute and deliver a new Warrant with
appropriate changes to reflect such Assignment, in the name or names of the assignee or assignees
specified in the Warrant Assignment or other instrument of assignment and, if the Warrant Holder’s
entire interest is not being transferred or assigned, in the name of the Warrant Holder, and upon
the Company’s execution and delivery of such new Warrant, this Warrant shall promptly be cancelled;
and provided that any assignee shall have all of the rights of the Initial Holder hereunder. The
Warrant Holder shall pay any transfer tax imposed in connection with such assignment (if any). Any
transfer or exchange of this Warrant shall be without charge to the Warrant Holder (except as
provided above with respect to transfer taxes, if any) and any new Warrant issued shall be dated
the date hereof.
Section 7. Assistance in Disposition of Warrant or Warrant Shares. Notwithstanding any
other provision herein, in the event that it becomes unlawful for the Warrant Holder to continue to
hold the Warrant, in whole or in part, or some or all of the Shares held by it, or restrictions are
imposed on the Warrant Holder by any statute, regulation or governmental authority which, in the
judgment of the Warrant Holder, make it unduly burdensome to continue to hold the Warrant or such
Shares, the Warrant Holder may sell or otherwise dispose of the Warrant (subject to the
restrictions on transfer provided in Section 6) or its Shares, and the Company agrees to provide
reasonable assistance to the Warrant Holder in disposing of the Warrant and such Shares in a prompt
and orderly manner and, at the request of the Warrant Holder, to provide (and authorize the Warrant
Holder to provide) financial and other information concerning the Company to any prospective
purchaser of the Warrant or Shares owned by the Warrant Holder.
Section 8. Identity of Transfer Agent. The Transfer Agent for the Shares is Mellon
Investor Services LLC. Upon the appointment of any subsequent transfer agent for the Shares, the
Company will mail to the Warrant Holder a statement setting forth the name and address of such
transfer agent.
Section 9. Lost, Mutilated or Missing Warrants. Upon receipt by the Company of notice
of the loss, theft, destruction or mutilation of any Warrant, and, in the case of loss, theft or
destruction, upon receipt of indemnification satisfactory to the Company (in the case of the
Initial Holder its unsecured, unbonded agreement of indemnity or affidavit of loss shall be
sufficient) or, in the case of mutilation, upon surrender and cancellation of the mutilated
Warrant, the Company shall execute and deliver a new Warrant of like tenor and representing the
right to purchase the same aggregate number of Warrant Shares.
Section 10. Limitation on Exercise. Notwithstanding anything to the contrary contained
herein, the number of Warrant Shares that may be acquired by the Warrant Holder upon any exercise
of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to ensure
that, following such exercise (or other issuance), the total number of Shares then beneficially
owned by the Warrant Holder and any other Persons whose beneficial ownership of Shares would be
aggregated with the Warrant Holder’s for purposes of Section 13(d) of the Exchange Act, does not
exceed 4.999% of the total number
9
of then issued and outstanding Shares (including for such purpose the Shares issuable upon such
exercise). For such purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being
acknowledged by the Warrant Holder that the Company is not representing to such Warrant Holder that
such calculation is in compliance with Section 13(d) of the Exchange Act and such Warrant Holder is
solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 10 applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by such Warrant Holder) and of which
portion of this Warrant is exercisable shall be in the sole discretion of the Warrant Holder, and
the submission of a Notice of Exercise shall be deemed to be the Warrant Holder’s determination of
whether this Warrant is exercisable (in relation to other securities owned by such Warrant Holder)
and of which portion of this Warrant is exercisable, in each case subject to such aggregate
percentage 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 10, in determining the
number of outstanding Shares, the Warrant Holder may rely on the number of outstanding Shares as
reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more
recent public announcement by the Company or (z) any other notice by the Company or the Company’s
transfer agent setting forth the number of Shares outstanding. Upon the written request of the
Warrant Holder, the Company shall within three Business Days confirm orally and in writing to such
Warrant Holder the number of Shares. This provision shall not restrict the number of Shares which a
Warrant Holder may receive or beneficially own in order to determine the amount of securities or
other consideration that such Warrant Holder may receive in the event of a transaction contemplated
in Section 4 of this Warrant. By written notice to the Company, which will not be effective
until the 61st day after such notice is delivered to the Company, the Warrant Holder may
waive the provisions of this Section 10 (but such waiver will not affect any other holder)
to change the beneficial ownership limitation to 9.999% of the number of Shares outstanding
immediately after giving effect to the issuance of Shares upon exercise of this Warrant, and the
provisions of this Section 10 shall continue to apply. Upon such a change by a Warrant
Holder of the beneficial ownership limitation from such 4.999% limitation to such 9.999%
limitation, the 4.999% beneficial ownership limitation may be reinstated by such Warrant Holder
(but such reinstatement will not affect any other holder) by written notice to the Company, which
will not be effective until the 61st day after such notice is delivered to the Company,
whereupon the provisions of this Section 10 shall continue to apply.
Section 11. Waivers; Amendments. Any provision of this Warrant may be amended or
waived with (but only with) the written consent of the Company and the Warrant Holder. No failure
or delay of the Company or the Warrant Holder in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereon or the exercise of any other right or power. No notice or demand on the
Company in any case shall entitle the Company to any other or future notice or demand in similar or
other circumstances. The rights and remedies of the Company and the Warrant Holder hereunder are
cumulative and not exclusive of any rights or remedies which it would otherwise have.
Section 12. Miscellaneous.
(a) Stockholder Rights. The Warrant shall not entitle any Warrant Holder, prior to the
exercise of the Warrant, to any voting rights as a stockholder of the Company.
(b) Expenses. The Company shall pay all reasonable expenses of the Warrant Holder,
including reasonable fees and disbursements of counsel, in connection with the preparation of the
Warrant, any waiver or consent hereunder or any amendment or modification hereof (regardless of
whether the same becomes effective), or the enforcement of the provisions hereof; provided that the
Company shall not be
10
required to pay any expenses of the Warrant Holder arising solely in connection with a transfer of
the Warrant.
(c) Successors and Assigns. All the provisions of this Warrant by or for the benefit
of the Company or the Warrant Holder shall bind and inure to the benefit of their respective
successors and assigns.
(d) Severability. In case any one or more of the provisions contained in this Warrant
shall be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions.
(e) Notices. Any notice or other communication hereunder shall be in writing and shall
be sufficient if sent by facsimile or first-class mail or courier, postage prepaid, and addressed
as follows: (a) if to the Company, addressed to the Company at its address for notices as set forth
below its signature hereon or any other address as the Company may hereafter notify to the Warrant
Holder and (b) if to the Warrant Holder, addressed to such address as the Warrant Holder may
hereafter from time to time notify to the Company for the purposes of notice hereunder.
(f) Equitable Remedies. Without limiting the rights of the Company and the Warrant
Holder to pursue all other legal and equitable rights available to such party for the other
parties’ failure to perform its obligations hereunder, the Company and the Warrant Holder each
hereto acknowledge and agree that the remedy at law for any failure to perform any obligations
hereunder would be inadequate and that each shall be entitled to specific performance, injunctive
relief or other equitable remedies in the event of any such failure, without proof of actual
damages and without posting any bond.
(g) Continued Effect. Rights and benefits conferred on the holders of Warrant Shares
pursuant to the provisions hereof shall continue to inure to the benefit of, and shall be
enforceable by, such holders, notwithstanding the surrender of the Warrant to, and its cancellation
by, the Company upon the full or partial exercise or repurchase hereof.
(h) Confidentiality. The Company shall not provide material, non-public information to
the Warrant Holder unless prior to providing such information (i) the Warrant Holder gives its
prior written consent to receiving such information and (ii) the Warrant Holder and the Company
enter into a non-disclosure agreement with respect to such information in a form reasonably
acceptable to both the Warrant Holder and the Company.
(i) Governing Law. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF
LAW.
(j) Section Headings. The section headings used herein are for convenience of
reference only and shall not be construed in any way to affect the interpretation of any provisions
of the Warrant.
[Remainder of Page Intentionally Left Blank]
11
In Witness Whereof, the Company has caused this Warrant to be duly executed by its
authorized signatory as of the day and year first above written.
| Alexza Pharmaceuticals, Inc., a Delaware corporation |
||||
| By: | ||||
| ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||||
| Senior Vice President, Chief Financial Officer, General Counsel and Secretary |
||||
| Address for Notices: Facsimile: |
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇ |
Exhibit A to Warrant
Form of Notice of Exercise
____________,20____
To: Alexza Pharmaceuticals, Inc.
Reference is made to the Warrant dated May __, 2011. Terms defined therein are used herein as
therein defined.
The undersigned, pursuant to the provisions set forth in the Warrant, hereby irrevocably
elects and agrees to purchase Shares, and makes payment herewith in
full therefor at the Exercise Price of $ in the following
form:
| o | Cash Exercise under Section 2(a). | ||
| o | Cashless Exercise under Section 2(a). | ||
| o | Combination exercise under Section 2(a). Specify number of Warrant Shares as to which Cash Exercise and Cashless Exercise are elected: |
| Cash Exercise: ______________ | |||
| Cashless Exercise: _______________ |
[If the number of Shares as to which the Warrant is being exercised is less than all of the
Shares purchasable thereunder, the undersigned hereby requests that a new Warrant representing the
remaining balance of the Shares be registered in the name of
, whose
address is:
.]
| [NAME OF WARRANT HOLDER] | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| [ADDRESS OF WARRANT HOLDER] | ||||||
Exhibit B to Warrant
Form of Warrant Assignment
Reference is made to the Warrant dated May __, 2011, issued by Alexza Pharmaceuticals, Inc.
Terms defined therein are used herein as therein defined.
FOR VALUE RECEIVED (the “Assignor”) hereby sells, assigns and
transfers all of the rights of the Assignor as set forth in such Warrant, with respect to the
number of Warrant Shares covered thereby as set forth below, to the Assignee(s) as set forth below:
Number of Warrant Shares
| Name(s) of Assignee(s) | Address(es) | Number of Warrant Shares |
||
All notices to be given by the Company to the Assignor as Warrant Holder shall be sent to the
Assignee(s) at the above listed address(es), and, if the number of Shares being hereby assigned is
less than all of the Shares covered by the Warrant held by the Assignor, then also to the Assignor.
In accordance with Section 6 of the Warrant, the Assignor requests that the Company execute
and deliver a new Warrant or Warrants in the name or names of the assignee or assignees, as is
appropriate, or, if the number of Shares being hereby assigned is less than all of the Shares
covered by the Warrant held by the Assignor, new Warrants in the name or names of the assignee or
the assignees, as is appropriate, and in the name of the Assignor.
Dated: , 20___
| [NAME OF ASSIGNOR] | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| [ADDRESS OF ASSIGNOR] | ||||||
Appendix A
Black Scholes Option Pricing formula to be used when calculating the value of each new warrant to
purchase one share in the Acquirer shall be:
CAcq = value of each warrant to purchase one share in the Acquirer
SAcq = price of Acquirer’s stock as determined by reference to the average of the
closing prices on the securities exchange or Nasdaq Global Market over the 20-day period ending
three trading days prior to the closing of the Corporate Reorganization described in Section
4(c) if the Acquirer’s stock is then traded on such exchange or system, or the average of the
closing bid or sale prices (whichever is applicable) in the over-the-counter market over the 20-day
period ending three trading days prior to the closing of the Corporate Reorganization if the
Acquirer’s stock is then actively traded in the over-the-counter market, or the then most recently
completed financing if the Acquirer’s stock is not then traded on a securities exchange or system
or in the over-the-counter market.
TAcq = expiration date of new warrants to purchase shares in the Acquirer =
TCorp
tAcq = date of issue of new warrants to purchase shares in the Acquirer
TAcq-tAcq = time until warrant expiration, expressed in years
s = volatility = annualized standard deviation of daily log-returns (using a 262-day annualization
factor) of the Acquirer’s stock price on the securities exchange or Nasdaq Global Market over a
20-day trading period, determined by the Warrant Holders, that is within the 100-day trading period
ending on the trading day immediately after the public announcement of the Corporate Reorganization
described in Section 4(c) if the Acquirer’s stock is then traded on such exchange or
system, or the annualized standard deviation of daily-log returns (using a 262-day annualization
factor) of the closing bid or sale prices (whichever is applicable) in the over-the-counter market
over a 20-day trading period, determined by the Warrant Holder, that is within the 100-day trading
period ending on the trading day immediately after the public announcement of the Corporate
Reorganization if the Acquirer’s stock is then actively traded in the over-the-counter market, or
0.6 (or 60%) if the Acquirer’s stock is not then traded on a securities exchange or system or in
the over-the-counter market.
N = cumulative normal distribution function
ln = natural logarithm
λ = dividend rate of the Acquirer for the most recent 12-month period at the time of closing of the
Corporate Reorganization.
KAcq = strike price of new warrants to purchase shares in the Acquirer =
KCorp * (SAcq
/ SCorp)
r = annual yield, as reported by Bloomberg at time tAcq, of the United States Treasury
security measuring the nearest time TAcq
Appendix B
Black Scholes Option Pricing formula to be used when calculating the value of each Warrant to
purchase one share in the Company shall be:
CCorp = value of each Warrant to purchase one share in the Company
SCorp = price of Company stock as determined by reference to the average of the closing
prices on the securities exchange or Nasdaq Global Market over the 20-day period ending three
trading days prior to the closing of the Corporate Reorganization described in Section 4(c)
if the Company’s stock is then traded on such exchange or system, or the average of the closing bid
or sale prices (whichever is applicable) in the over-the-counter market over the 20-day period
ending three trading days prior to the closing of the Corporate Reorganization if the Company’s
stock is then actively traded in the over-the-counter market, or the then most recently completed
financing if the Company’s stock is not then traded on a securities exchange or system or in the
over-the-counter market.
TCorp = expiration date of Warrants to purchase shares in the Company
tCorp = date of public announcement of transaction
TCorp-tCorp = time until Warrant expiration, expressed in years
s = volatility = the annualized standard deviation of daily log-returns (using a 262-day
annualization factor) of the Company’s stock price on the securities exchange or Nasdaq Global
Market over a 20-day trading period, determined by the Warrant Holders, that is within the 100-day
trading period ending on the trading day immediately after the public announcement of the Corporate
Reorganization described in Section 4(c) if the Company’s stock is then traded on such
exchange or system, or the annualized standard deviation of daily-log returns (using a 262-day
annualization factor) of the closing bid or sale prices (whichever is applicable) in the
over-the-counter market over a 20-day trading period, determined by the Warrant Holder, that is
within the 100-day trading period ending on the trading day immediately after the public
announcement of the Corporate Reorganization if the Company’s stock is then actively traded in the
over-the-counter market, or 0.6 (or 60%) if the Company’s stock is not then traded on a securities
exchange or system or in the over-the-counter market.
N = cumulative normal distribution function
ln = natural logarithm
λ = dividend rate of the Company for the most recent 12-month period at the time of closing of the
Corporate Reorganization.
KCorp = strike price of warrant
r = annual yield, as reported by Bloomberg at time tCorp, of the United States Treasury
security measuring the nearest time T Corp
