WARRANT NO. CSW-2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT TO PURCHASE 10,000 SHARES
OF COMMON STOCK OF
INHALE THERAPEUTIC SYSTEMS
(VOID AFTER OCTOBER 1, 2006)
This certifies that Kiet Nguyen or his assigns (the "Holder"), for value
received, is entitled to purchase from Inhale Therapeutic Systems, a California
corporation (the "Company"), having a place of business at 1060 East Meadow
Circle, Palo Alto, California, 94303, a maximum of Ten Thousand (10,000) fully
paid and nonassessable shares of the Company's Common Stock for cash at a price
of $13.125 per share (the "Stock Purchase Price") at any time or from time to
time after the satisfaction of the conditions set forth in Section 1.1 below
and until 5:00 p.m. (Pacific time) on October 1, 2006 (the "Expiration Date"),
upon surrender to the Company at its principal office (or at such other
location as the Company may advise the Holder in writing) of this Warrant
properly endorsed with the Form of Subscription attached hereto duly filled in
and signed and, if applicable, upon payment in cash or by check of the
aggregate Stock Purchase Price for the number of shares for which this Warrant
is being exercised determined in accordance with the provisions hereof. The
Stock Purchase Price and the number of shares purchasable hereunder are subject
to adjustment as provided in Section 3 of this Warrant.
This Warrant is subject to the following terms and conditions:
1. Exercise; Issuance of Certificates; Payment for Shares.
1.1 EXERCISABILITY. This Warrant shall not be exercisable until such time
as T.M.T. Associates LLC ("Landlord") has completed one of the following two
conditions: (a) Landlord shall have closed the Tenant Improvement Loan
referred to in Section 3.1 of that certain Lease Agreement, dated October 2,
1996, by and between the Company and Landlord (the "Lease") and shall have
disbursed proceeds from such Tenant Improvement Loan of at least $5,000,000 to
the Company; or (b) in the event the Company waives Landlord's obligation to
procure the Tenant Improvement Loan under the Lease, Landlord shall have
procured a written loan commitment on the terms and conditions described in
Section 3.1(c) of the Lease from a lender meeting the qualifications set forth
in Section 3.1(c) of the Lease. Upon the completion of one of the two
conditions set forth in the preceding sentence prior to the Expiration Date,
this Warrant shall be exercisable upon the terms and conditions set forth
herein. If neither of the two
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conditions is satisfied prior to the Expiration Date, this Warrant shall not
become exercisable and shall expire and be of no further force or effect.
1.2. GENERAL. Subject to the requirements of Section 1.1 above, this
Warrant is exercisable at the option of the holder of record hereof up to the
Expiration Date for all or any part of the shares of Common Stock (but not for a
fraction of a share) which may be purchased hereunder. The Company agrees that
the shares of Common Stock purchased under this Warrant shall be and are deemed
to be issued to the Holder hereof as the record owner of such shares as of the
close of business on the date on which this Warrant shall have been surrendered,
properly endorsed, the completed, executed Form of Subscription delivered and
payment made for such shares. Certificates for the shares of Common Stock so
purchased, together with any other securities or property to which the Holder
hereof is entitled upon such exercise, shall be delivered to the Holder hereof
by the Company at the Company's expense within a reasonable time after the
rights represented by this Warrant have been so exercised. In case of a
purchase of less than all the shares which may be purchased under this Warrant,
the Company shall cancel this Warrant and execute and deliver a new Warrant or
Warrants of like tenor for the balance of the shares purchasable under the
Warrant surrendered upon such purchase to the Holder hereof within a reasonable
time. Each stock certificate so delivered shall be in such denominations of
Common Stock as may be requested by the Holder hereof and shall be registered in
the name of such Holder.
1.3. NET ISSUE EXERCISE. Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company's Common Stock
is greater than the Stock Purchase Price (at the date of calculation as set
forth below), in lieu of exercising this Warrant for cash, the Holder may
elect to receive shares equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant
at the principal office of the Company together with the properly endorsed
Form of Subscription and notice of such election in which event the Company
shall issue to the Holder a number of shares of Common Stock computed using
the following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to
the Holder
Y = the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the
Warrant is being exercised, the portion of the Warrant
being canceled (at the date of such calculation)
A = the fair market value of one share of the Company's
Common Stock (at the date of such calculation)
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B = Stock Purchase Price (as adjusted to the date of such
calculation)
For purposes of the above calculation, if the Common Stock is traded in a
public market, the fair market value of one share of Common Stock shall be the
average of the closing price of the Company's Common Stock reported for each
of the five (5) business days immediately preceding the business day on which
Holder delivers the Form of Subscription to the Company. If the Common Stock
is not traded in a public market, fair market value of one share of Common
Stock shall be determined by the Company's Board of Directors in good faith.
The Company and the Holder agree to report any exercise under this Section 1.3
for federal and state income tax purposes in the following manner: Holder
will be treated as having excised a portion of the Warrant for X shares of the
Company's Common Stock, and having paid the Stock Purchase Price due upon such
exercise by surrendering to the Company another portion of the Warrant
exercisable for a number of shares equal to Y-X, with such surrender portion
of the Warrant valued at (Y-X)(A-B).
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES. The Company covenants and
agrees that all shares of Common Stock which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive
rights of any shareholder and free of all taxes, liens and charges with
respect to the issue thereof. The Company further covenants and agrees that,
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved, for the
purpose of issue or transfer upon exercise of the subscription rights evidenced
by this Warrant, a sufficient number of shares of authorized but unissued Common
Stock, or other securities and property, when and as required to provide for
the exercise of the rights represented by this Warrant. The Company will take
all such action as may be necessary to assure that such shares of Common Stock
may be issued as provided herein without violation of any applicable law or
regulation, or of any requirements of any domestic securities exchange upon
which the Common Stock may be listed; provided, however, that the Company
shall not be required to effect a registration under Federal or State
securities laws with respect to such exercise. The Company will not take any
action which would result in any adjustment of the Stock Purchase Price (as
set forth in Section 3 hereof) if the total number of shares of Common Stock
issuable after such action upon exercise of all outstanding warrants, together
with all shares of Common Stock then outstanding and all shares of Common
Stock then issuable upon exercise of all options and upon the conversion of
all convertible securities then outstanding, would exceed the total number of
shares of Common Stock then authorized by the Company's Restated Articles of
Incorporation.
3. ADJUSTMENT OF STOCK PURCHASE PRICE AND NUMBER OF SHARES. The Stock
Purchase Price and the number of shares purchasable upon the exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence
of certain events described in this Section 3. Upon each adjustment of the
Stock Purchase Price, the Holder of this Warrant shall thereafter be entitled
to purchase, at the Stock Purchase Price resulting from such adjustment, the
number of shares obtained by multiplying the Stock Purchase Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such
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adjustment, and dividing the product thereof by the Stock Purchase Price
resulting from such adjustment.
3.1. SUBDIVISION OR COMBINATION OF STOCK. In case the Company shall at
any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Stock Purchase Price in effect immediately prior to
such subdivision shall be proportionately reduced, and conversely, in case
the outstanding shares of Common Stock of the Company shall be combined into
a smaller number of shares, the Stock Purchase Price in effect immediately
prior to such combination shall be proportionately increased.
3.2. DIVIDENDS IN COMMON STOCK, OTHER STOCK, PROPERTY, RECLASSIFICATION.
If at any time or from time to time the Holders of Common Stock (or any
shares of stock or other securities at the time receivable upon the exercise
of this Warrant) shall have received or become entitled to receive, without
payment therefor,
(a) Common Stock or any shares of stock or other securities which
are at any time directly or indirectly convertible into or exchangeable for
Common Stock, or any rights or options to subscribe for, purchase or
otherwise acquire any of the foregoing by way of dividend or other
distribution,
(b) any cash paid or payable otherwise than as a cash dividend, or
(c) Common Stock or additional stock or other securities or
property (including cash) by way of spinoff, split-up, reclassification,
combination of shares or similar corporate rearrangement, (other than shares
of Common Stock issued as a stock split or adjustments in respect of which
shall be covered by the terms of Section 3.1 above), then and in each such
case, the Holder hereof shall, upon the exercise of this Warrant, be entitled
to receive, in addition to the number of shares of Common Stock receivable
thereupon, and without payment of any additional consideration therefor, the
amount of stock and other securities and property (including cash in the
cases referred to in clause (b) above and this clause (c)) which such Holder
would hold on the date of such exercise had he been the holder of record of
such Common Stock as of the date on which holders of Common Stock received or
became entitled to receive such shares or all other additional stock and
other securities and property.
3.3. REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. If
any recapitalization, reclassification or reorganization of the capital stock
of the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets or other
transaction shall be effected in such a way that holders of Common Stock
shall be entitled to receive stock, securities, or other assets or property
(an "Organic Change"), then, as a condition of such Organic Change, lawful
and adequate provisions shall be made by the Company whereby the Holder
hereof shall thereafter have the right to purchase and receive (in lieu of
the shares of the Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented
hereby) such shares of stock, securities or other assets or property as may
be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of
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shares of such stock immediately theretofore purchasable and receivable upon
the exercise of the rights represented hereby; provided, however, that in the
event the value of the stock or securities (determined in good faith by the
Board of Directors of the Company) issuable or payable with respect to one
share of the Common Stock of the Company immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby is in
excess of the Stock Purchase Price hereof effective at the time of a merger
and the stock or securities received in such reorganization, if any, are
publicly traded and are freely tradeable by the Holder under Rule 144 or 145
under the Securities Act of 1933, as amended, then this Warrant shall expire
unless exercised prior to such Organic Change. In the event of any Organic
Change, appropriate provision shall be made by the Company with respect to
the rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustments
of the Stock Purchase Price and of the number of shares purchasable and
receivable upon the exercise of this Warrant) shall thereafter be applicable,
in relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise hereof.
3.4. CERTAIN EVENTS. If any change in the outstanding Common Stock
of the Company or any other event occurs as to which the other provisions of
this Section 3 are not strictly applicable or if strictly applicable would
not fairly protect the purchase rights of the Holder of the Warrant in
accordance with such provisions, then the Board of Directors of the Company
shall make an adjustment in the number and class of shares available under
the Warrant, the Stock Purchase Price or the application of such provisions,
so as to protect such purchase rights as aforesaid. The adjustment shall be
such as will give the Holder of the Warrant upon exercise for the same
aggregate Stock Purchase Price the total number, class and kind of shares as
he would have owned had the Warrant been exercised prior to the event and had
he continued to hold such shares until after the event requiring adjustment.
3.5. NOTICES OF CHANGE.
(a) Promptly following any adjustment in the number or class of
shares subject to this Warrant and of the Stock Purchase Price, the Company
shall give written notice thereof to the Holder, setting forth in reasonable
detail and certifying the calculation of such adjustment.
(b) The Company shall give written notice to the Holder at least 10
business days prior to the date on which the Company closes its books or
takes a record for determining rights to receive any dividends or
distributions.
(c) The Company shall also give written notice to the Holder at
least 15 business days prior to the date on which an Organic Change shall
take place.
4. ISSUE TAX. The issuance of certificates for shares of Common Stock upon
the exercise of the Warrant shall be made without charge to the Holder of the
Warrant for any issue tax (other than any applicable income taxes) in respect
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
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issuance and delivery of any certificate in a name other than that of the
then Holder of the Warrant being exercised.
5. CLOSING OF BOOKS. The Company will at no time close its transfer books
against the transfer of any warrant or of any shares of Common Stock issued
or issuable upon the exercise of any warrant in any manner which interferes
with the timely exercise of this Warrant.
6. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained
in this Warrant shall be construed as conferring upon the Holder hereof the
right to vote or to consent or to receive notice as a shareholder of the
Company or any other matters or any rights whatsoever as a shareholder of the
Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
holder to purchase shares of Common Stock, and no mere enumeration herein of
the rights or privileges of the holder hereof, shall give rise to any
liability of such Holder for the Stock Purchase Price or as a shareholder of
the Company, whether such liability is asserted by the Company or by its
creditors.
7. WARRANTS TRANSFERABLE. Subject to compliance with applicable federal and
state securities laws, this Warrant and all rights hereunder are
transferable, in whole or in part, without charge to the holder hereof
(except for transfer taxes), upon surrender of this Warrant properly
endorsed. Each taker and holder of this Warrant, by taking or holding the
same, consents and agrees that this Warrant, when endorsed in blank, shall be
deemed negotiable, and that the holder hereof, when this Warrant shall have
been so endorsed, may be treated by the Company, at the Company's option, and
all other persons dealing with this Warrant as the absolute owner hereof for
any purpose and as the person entitled to exercise the rights represented by
this Warrant, or to the transfer hereof on the books of the Company any
notice to the contrary notwithstanding; but until such transfer on such
books, the Company may treat the registered owner hereof as the owner for all
purposes.
8. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and
obligations of the Company, of the holder of this Warrant and of the holder
of shares of Common Stock issued upon exercise of this Warrant, referred to
in Section 7 shall survive the exercise of this Warrant.
9. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
10. NOTICES. Any notice, request or other document required or permitted to
be given or delivered to the holder hereof or the Company shall be delivered
or shall be sent by certified mail, postage prepaid, to each such holder at
its address as shown on the books of the Company or to the Company at the
address indicated therefor in the first paragraph of this Warrant or such
other address as either may from time to time provide to the other.
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11. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of
the Company relating to the Common Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant. All of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof.
12. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of the
several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties
shall be governed by, the laws of the State of California.
13. LOST WARRANTS. The Company represents and warrants to the Holder hereof
that upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction, or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant, the Company, at its expense, will
make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant.
14. FRACTIONAL SHARES. No fractional shares shall be issued upon exercise of
this Warrant. The Company shall, in lieu of issuing any fractional share,
pay the holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the then effective Stock Purchase Price.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its officers, thereunto duly authorized this 1st day of November,
1996.
INHALE THERAPEUTIC SYSTEMS,
a California corporation
/s/ Robert B. Chess
----------------------------
Robert B. Chess
President
ATTEST:
/s/ Mark P. Tanoury
- ---------------------------
Mark P. Tanoury
Secretary
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EXHIBIT A
SUBSCRIPTION FORM
Date: , 19
------------------ ----
Inhale Therapeutic Systems
1060 East Meadow Circle
Palo Alto, CA 94303
Attn: President
Ladies and Gentlemen:
/ / The undersigned hereby elects to exercise the warrant issued to it by
Inhale Therapeutic Systems (the "Company") and dated November 1, 1996
Warrant No. CSW-2 (the "Warrant") and to purchase thereunder
__________________________________ shares of the Common Stock of the
Company (the "Shares") at a purchase price of _______________________
Dollars ($__________) per Share or an aggregate purchase price of
____________________ Dollars ($__________) (the "Purchase Price").
/ / The undersigned hereby elects to convert _______________________ percent
(____%) of the value of the Warrant pursuant to the provisions of Section
1.3 of the Warrant.
Pursuant to the terms of the Warrant the undersigned has delivered the
Purchase Price herewith in full in cash or by certified check or wire
transfer. The undersigned also makes the representations set forth on the
attached Exhibit B of the Warrant.
Very truly yours,
--------------------------------
By:
-----------------------------
Title:
--------------------------
EXHIBIT B
INVESTMENT REPRESENTATION
Date: , 19
------------------ ----
Inhale Therapeutic Systems
1060 East Meadow Circle
Palo Alto, CA 94303
Attn: President
Ladies and Gentlemen:
The undersigned, _________________________ ("Purchaser"), intends to
acquire up to ______________ shares of the Common Stock (the "Common Stock")
of Inhale Therapeutic Systems (the "Company") from the Company pursuant to
the exercise of that certain Warrant to purchase Common Stock held by
Purchaser. The Common Stock will be issued to Purchaser in a transaction not
involving a public offering and pursuant to an exemption from registration
under the Securities Act of 1933, as amended (the "1933 Act") and applicable
state securities laws. In connection with such purchase and in order to
comply with the exemptions from registration relied upon by the Company,
Purchaser represents, warrants and agrees as follows:
Purchaser is acquiring the Common Stock for its own account, to hold for
investment, and Purchaser shall not make any sale, transfer or other
disposition of the Common Stock in violation of the 1933 Act or the General
Rules and Regulations promulgated thereunder by the Securities and Exchange
Commission (the "SEC") or in violation of any applicable state securities law.
Purchaser has been advised that the Common Stock has not been registered
under the 1933 Act or state securities laws on the ground that this
transaction is exempt from registration, and that reliance by the Company on
such exemptions is predicated in part on Purchaser's representations set
forth in this letter.
Purchaser has been informed that under the 1933 Act, the Common Stock
must be held indefinitely unless it is subsequently registered under the 1933
Act or unless an exemption from such registration (such as Rule 144) is
available with respect to any proposed transfer or disposition by Purchaser
of the Common Stock. Purchaser further agrees that the Company may refuse to
permit Purchaser to sell, transfer or dispose of the Common Stock (except as
permitted under Rule 144) unless there is in effect a registration statement
under the 1933 Act and any applicable state securities laws covering such
transfer, or unless Purchaser furnishes an opinion of counsel reasonably
satisfactory to counsel for the Company, to the effect that such registration
is not required.
Purchaser also understands and agrees that there will be placed on the
certificate(s) for the Common Stock, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or any state securities laws. These shares
have been acquired for investment and may not be sold or otherwise
transferred in the absence of an effective registration statement
for these shares under the Securities Act and applicable state
securities laws, or an opinion of counsel satisfactory to the
Company that registration is not required and that an applicable
exemption is available."
Purchaser has carefully read this letter and has discussed its
requirements and other applicable limitations upon Purchaser's resale of
the Common Stock with Purchaser's counsel.
Very truly yours,
--------------------------------
By:
-----------------------------
Title:
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