EXHIBIT 10.12
THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
OFFERED, SOLD, DISTRIBUTED, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
(A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES OR
(B) THE COMPANY RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF THESE
SECURITIES (IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY) STATING THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION OR (C) THE COMPANY OTHERWISE SATISFIES
ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.
HOLLIS-EDEN PHARMACEUTICALS, INC.
SERIES A WARRANT AGREEMENT
Reissued May 5, 2000
HOLLIS-EDEN PHARMACEUTICALS, INC., a Delaware corporation (the "Company"),
hereby grants this 20th day of May 1997, to Richard B. Hollis ("Holder"), a
warrant to purchase up to 393,250 shares of Common stock (the "Common Stock") of
the Company at a per share exercise price of $11.02 (the "Warrant Price").
1. Exercisability; Term. This Warrant becomes exercisable on the date
that shares underlying the Warrant are registered under the Securities Act of
1933, as amended (the "Securities Act") and shall expire at 5:00 p.m. PST on
January 7, 2006. The Company hereby undertakes to use its best efforts to file
for such registration within one year after it becomes a public company (whether
through a public offering, a business combination with a public company or
otherwise).
2. No Stockholder Rights. This Warrant shall not entitle Holder to any of
the rights of a stockholder of the Company.
3. Reservation of Stock. The Company covenants that during the period
this Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of the shares upon the exercise of this Warrant. The Company agrees that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon the exercise of this
Warrant.
4. Exercise of Warrant. The Holder may exercise this Warrant only after
Holder has delivered a written notice to the Company indicating Holder has
elected to exercise this Warrant. This Warrant may be exercised by the Holder in
whole (or in part) by the surrender of this Warrant at the principal office of
the Company and by cash payment of the aggregate Warrant Price in United States
currency. At the option of Holder, the Warrant Price may be paid by applying any
royalties due and payable to Holder under the License Agreement toward the
aggregate Warrant Price. This Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for
exercise as provided above, and the person entitled to receive the shares of
Common Stock issuable upon such exercise shall be treated for all purposes as
the holder of such shares of record as of the close of business on such date. As
promptly as practicable on or after such date, the Company shall issue and
deliver to the
1.
person or persons entitled to receive the same a certificate or certificates for
the number of full shares of Common Stock issuable upon such exercise. If this
Warrant is exercised in part, the Company shall deliver a new Warrant to Holder
covering the shares not purchased hereunder on the same terms as set forth
herein.
5. Conversion. In lieu of exercising this Warrant as specified in Section
5, Holder may from time to time convert this Warrant, in whole or in part, into
a number of shares determined by dividing (a) the aggregate Fair Market Value
(determined on the date of exercise) of the shares of the Company's Common Stock
issuable upon exercise of this Warrant minus the aggregate Warrant Price of such
shares by (b) the Fair Market Value (determined on the date of exercise) of one
share. For purposes of this Section 6, "Fair Market Value" shall be the value
determined in accordance with the following provisions:
(a) If the Common Stock is not at the time listed or admitted to
trading on any stock exchange but is traded on the Nasdaq National Market
System, the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question, as such price is reported by the National
Association of Securities Dealers through the Nasdaq National Market System or
any successor system. If there is no closing selling price for the Common Stock
on the date in questions, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
(b) If the Common Stock is at the time listed or admitted to trading
on any stock exchange, the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the stock exchange
determined by the Board of Directors of the Company to be the primary market for
the Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.
(c) If the Common stock is at the time neither listed nor admitted to
trading on any stock exchange nor traded on the Nasdaq National Market System,
then such Fair Market Value shall be determined by the Board of Directors of the
Company after taking into account such factors as the Board of Directors of the
Company shall deem appropriate.
6. Adjustment of Warrant Price and Number of Shares. The number of Shares
issuable upon the exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time upon the happening of certain events as
follows:
(a) Adjustment for Dividends in Stock. In case at any time or from
time to time on or after the date hereof the holders of the Common Stock of the
Company shall have received, or, on or after the record date fixed for the
determination of eligible stockholders, shall have become entitled to receive,
without payment therefore, other or additional stock of the Company by way of
dividend, then and in each case, the Holder of this Warrant shall, upon the
exercise hereof, be entitled to receive, in addition to the number of shares
receivable thereupon, and without payment of any additional consideration
therefore, the amount of such other or additional stock of the Company which
such Holder would hold on the date of such exercise had
2.
it been the Holder of record of such Common Stock on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock receivable
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by paragraphs (b) and (c) of this Section 7.
(b) Adjustment for Reclassification or Reorganization. In case of any
reclassification or change of the outstanding securities of the Company or of
any reorganization of the Company on or after the date hereof, excluding any
Corporate Transaction, then and in each such case the Holder of this Warrant,
upon the exercise hereof at any time after the consummation of such
reclassification, change or reorganization, shall be entitled to receive, in
lieu of the stock or other securities or property to which such Holder would
have been entitled upon such consummation, the stock or other securities or
property to which such Holder would have been entitled upon such consummation if
such Holder had exercised this Warrant immediately prior thereto, all subject to
further adjustment as provided in paragraphs (a) and (c); in each such case, the
terms of this Section 7 shall be applicable to the shares of stock or other
securities properly receivable upon the exercise of this Warrant after such
consummation.
(c) Stock Splits and Reverse Stock Splits. If at any time on or after
the date hereof the Company shall subdivide its outstanding shares of Common
Stock into a greater number of shares, the Warrant Price in effect immediately
prior to such subdivision shall thereby be proportionately reduced and the
number of shares receivable upon exercise of the Warrant shall thereby be
proportionately increased; and, conversely, if at any time on or after the date
hereof the outstanding number of shares of Common Stock shall be combined into a
smaller number of shares, the Warrant Price in effect immediately prior to such
combination shall thereby be proportionately increased and the number of shares
receivable upon exercise of the Warrant shall thereby be proportionately
decreased.
(d) Fractional Shares. In the event of any adjustment in the number of
Shares covered by this Warrant pursuant to this Section 7, any fractional shares
resulting from such adjustment shall be disregarded and this Warrant shall cover
only the number of full shares resulting from such adjustment. The foregoing
adjustments shall be made by the Board of Directors of the Company, or by the
applicable terms of any assumption or substitution documents, and any
adjustments so made shall be final, binding and conclusive.
(e) Notice of Action. In the event the Company shall propose to take
any action of the type described in clause (a), (b) or (c) of this Section 7,
the Company shall give notice to the Holder, in the manner set forth in Section
11, which notice shall specify the record date, if any, with respect to any such
action and the approximate date on which such action is to take place. Such
notice shall also set forth such facts with respect thereto as shall be
reasonably necessary to indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Warrant Price and the
number, kind or class of shares or other securities or property which shall be
deliverable or purchasable upon the occurrence of such action or delivered upon
exercise of this Warrant. In the case of any action which would require the
fixing of a record date, such notice shall be given at least ten days prior to
the date so fixed, and in case of all other action, such notice shall be given
at least 15 days prior to the taking of such proposed action.
3.
7. Notice of Dividends, Distributions and Other Rights. In the event of
any taking by the Company of a record of Holders of Common Stock of the Company
for the purpose of determining the Holders thereof who are entitled to receive
any dividend or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, the Company will mail to the Holders of
this Warrant at least 20 days prior to such record date, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right.
8. Transfer of Warrant. This Warrant may not be transferred by the Holder
without the written consent of the Company (except by operation of law or to a
successor by merger, acquisition or other corporate reorganization) and
compliance with applicable federal and state securities laws in the opinion of
the Company's legal counsel.
9. Compliance with Securities Laws.
(a) The holder represents and agrees that this Warrant, and the
underlying shares of Common Stock (the "Shares"), if the Warrant is exercised,
are purchased only for investment, for Holder's own account, and without any
present intention to sell or distribute the Warrant or the Shares. Holder
further acknowledges that the Shares will not be issued pursuant to the exercise
of this Warrant unless the exercise of the Warrant and the issuance and delivery
of such Shares shall comply with all relevant provisions of law, including,
without limitation, the Securities Act and other federal and state securities
laws and regulations and the requirements of any stock exchange upon which the
Shares may then be listed.
(b) The Holder of this Warrant acknowledges and agrees that this
Warrant and the Shares have not been registered under the Securities Act and
accordingly will not be transferable except as permitted under the various
exemptions contained in the Securities Act, or upon satisfaction of the
registration and prospectus delivery requirements of the Securities Act.
Therefore, the Warrant and the Shares must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Holder understands that the certificate evidencing
the Shares will be imprinted with a legend which prohibits the transfer thereof
unless they are registered or unless the Company receives an opinion of counsel
reasonably satisfactory to the Company that such registration is not required.
10. Miscellaneous. This Warrant shall be governed by the laws of the State
of Delaware. The headings in this Warrant are for purposes of convenience and
reference only, and shall not be deemed to constitute a part hereof. Neither
this Warrant, nor any term hereof may be changed, waived, discharged or
terminated orally but only by an instrument in writing signed by the Company and
the registered Holder hereof.
Any notice or other communication sent or delivered hereunder shall be
in writing and shall be effective if hand-delivered, if sent by certified or
registered mail or postage prepaid or by international courier service or if
sent by telecopier (facsimile) for which confirmation of transmission is
provided, if sent to a party at its address set forth below:
4.
To Holder: Richard B. Hollis
9333 Genesee Avenue, Suite 200
San Diego, CA 92121
To the Company:
Hollis-Eden Pharmaceuticals, Inc.
9333 Genesee Avenue, Suite 200
San Diego, CA 92121
Attention: Richard B. Hollis, Chairman and CEO
Telephone: 858-587-9333
Fax : 858-558-6470
or to such address as any party shall hereafter designate by notice to the other
party. A notice shall be deemed to have been received one business day after it
is forwarded via fax or if hand delivered; three business days after it has been
delivered, properly addressed, to an international courier service, and 10
business days after it has been deposited, properly addressed, in the mail.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
on its behalf by the undersigned, thereunto duly authorized.
HOLLIS-EDEN PHARMACEUTICALS, INC.
By: /s/ Richard B. Hollis
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Richard B. Hollis
Chairman of the Board and
Chief Executive Officer
5.