Exhibit 4.3
Exhibit B
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS, IN
RELIANCE UPON EXEMPTIONS FROM REGISTRATION FOR NON-PUBLIC OFFERINGS. THIS
SECURITY MAY NOT BE SOLD OR TRANSFERRED UNLESS IT IS REGISTERED UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS THE ISSUER
RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT AN EXEMPTION
FROM REGISTRATION IS AVAILABLE (UNLESS WAIVED).
GENOME THERAPEUTICS CORP.
PURCHASE WARRANT
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WARRANT ("WARRANT") TO PURCHASE SHARES OF
COMMON STOCK, $0.10 PAR VALUE PER SHARE
This is to certify that, FOR VALUE RECEIVED, [________________________]
("Warrantholder"), is entitled to purchase, subject to the provisions of this
Warrant, from Genome Therapeutics Corp., a corporation organized under the laws
of The Commonwealth of Massachusetts ("Company"), at any time and from time to
time during an exercise period commencing on or after the first conversion or
redemption under the Related Note (as defined below) and ending on a date on or
prior to December 31, 2008 ("Expiration Date") as described in Section 3(a)
below, all or a portion of up to [PRO RATA SHARE OF 487,500] shares ("Warrant
Shares") of Common Stock, $0.10 par value ("Common Stock"), of the Company, at
an exercise price per share equal to $8.00, subject to adjustment as provided
herein (the exercise price in effect from time to time hereafter being herein
called the "Warrant Price").
This Warrant has been issued pursuant to the terms of the Purchase
Agreement ("Purchase Agreement") dated on or about the date hereof between the
Company and the Warrantholder, and, pursuant to the Purchase Agreement, has been
issued in conjunction with a Note (as defined in the Purchase Agreement) issued
to the Warrantholder on or about the date hereof (the "Related Note").
Capitalized terms used herein and not defined herein shall have the meaning
specified in the Purchase Agreement or the Related Note.
Section 1. Registration. The Company shall maintain books for the
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transfer and registration of the Warrant. Upon the initial issuance of the
Warrant, the Company shall issue and register the Warrant in the name of the
Warrantholder.
Section 2. Transfers. As provided herein, this Warrant may be
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transferred only (1) pursuant to a registration statement filed under the
Securities Act of 1933, as amended ("Securities Act") or an exemption from
registration thereunder, and (2) concurrently with a transfer (to the same
transferee) of the Related Note in accordance with the transfer provisions of
the Related Note. Subject to such restrictions, the Company shall transfer this
Warrant from time
to time, upon the books to be maintained by the Company for that purpose, upon
surrender thereof for transfer properly endorsed or accompanied by appropriate
instructions for transfer upon any such transfer, and a new Warrant shall be
issued to the transferee and the surrendered Warrant shall be canceled by the
Company.
Section 3. Exercise of Warrant
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(a) Exercise Periods. This Warrant shall have multiple exercise
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periods (each an "Exercise Period") corresponding to different tranches of
Warrant Shares (each a "Tranche"). Upon each conversion of the Related Note
(whether voluntary or mandatory), the number of Warrant Shares equal to 26% of
the number of Underlying Shares issued or issuable upon such conversion shall
constitute a separate Tranche hereunder. The Exercise Period for each Tranche
shall commence on the Conversion Date applicable to such Tranche and terminate
on the fourth (4th) anniversary of such Conversion Date. This Warrant may be
exercised for up to the number of Warrant Shares included within a Tranche at
any time and from time to time during the Exercise Period applicable to such
Tranche. Upon any redemption or repayment of the Related Note in whole or in
part (not including repayment of the Related Note on the original Maturity Date
and not including any redemption pursuant to Section 3(k) of the Related Note)
and upon the failure by the Company to pay all amounts due under the Related
Note on the Maturity Date, any Warrant Shares (or in the case of a partial
redemption, the proportionate part thereof) hereunder which are not yet
exercisable shall become immediately exercisable, and the Exercise Period for
such Warrant Shares shall commence on such redemption or Maturity Date, as the
case may be, and terminate on the fourth (4th) anniversary of such redemption or
Maturity Date, respectively. (If the Company is required to redeem the Related
Note in accordance with its terms but fails to do so, such Related Note shall be
deemed redeemed as of the scheduled redemption only for purposes hereof.)
(b) Exercise Procedure. Subject to the foregoing and the other
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provisions hereof, the Warrantholder may exercise this Warrant from time to time
by (i) delivering (which may be by fax) a duly executed Warrant Exercise Form in
the form attached hereto (the "Exercise Agreement") to the Company on any
business day at the Company's principal executive offices (or such other office
or agency of the Company as it may designate by notice to the holder hereof),
and (ii) making payment to the Company either (A) in cash, by certified or
official bank check or by wire transfer of immediately available funds for the
account of the Company, of the Warrant Price for the Warrant Shares specified in
the Exercise Agreement or (B) by delivery to the Company of a written notice of
an election to effect a "Cashless Exercise" (as defined below) for the Warrant
Shares specified in the Exercise Agreement. The Warrant Shares so purchased
shall be deemed to be issued to the Warrantholder or such holder's designee, as
the record owner of such shares, as of the close of business on the date on
which the completed Exercise Agreement shall have been delivered to the Company
(or such later date as may be specified in the Exercise Agreement). Certificates
for the Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be promptly delivered to the
Warrantholder within a reasonable time, not exceeding three (3) business days
after this Warrant shall have been so exercised. The certificates so delivered
shall be in such denominations as may be requested by the Warrantholder and
shall be registered in the name of such holder or such other name as shall be
designated by such holder. If this Warrant shall have
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been exercised only in part, then, unless this Warrant has expired, the Company
shall (subject to Section 3(d) below), at its expense, at the time of delivery
of such certificates, deliver to the Warrantholder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have been
exercised. As used herein, "business day" shall mean any day other than a
Saturday, Sunday or a day on which commercial banks in the city of New York, New
York are authorized or required by law or executive order to remain closed.
(c) Cashless Exercise. To effect a "Cashless Exercise", the
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Warrantholder shall indicate on the Exercise Agreement notice of the holder's
intention to do so, including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms hereof. In
the event of a Cashless Exercise, in lieu of paying the Warrant Price in cash,
the holder shall surrender this Warrant or the portion hereof being exercised
for that number of shares of Common Stock determined by multiplying the number
of Warrant Shares to which it would otherwise be entitled by a fraction, the
numerator of which shall be the difference between the then current Fair Market
Price per share of the Common Stock and the Warrant Price, and the denominator
of which shall be the then current Fair Market Price per share of the Common
Stock. For this purpose, the "Fair Market Price" of the Common Stock shall be
the closing price of the Common Stock as reported by the Nasdaq National Market
(or other exchange or market on which the Common Stock is principally traded) on
the trading day immediately preceding the date of the Exercise Agreement.
(d) Book-Entry. Notwithstanding anything to the contrary set forth
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herein, so long as any Notes remain outstanding, upon exercise of any portion of
this Warrant in accordance with the terms hereof, the Warrantholder shall not be
required to physically surrender this Warrant to the Company unless such holder
is purchasing the full amount of Warrant Shares represented by this Warrant. The
Warrantholder and the Company shall maintain records showing the number of
Warrant Shares so purchased hereunder and the dates of such purchases or shall
use such other method, reasonably satisfactory to the Warrantholder and the
Company, so as not to require physical surrender of this Warrant upon each such
exercise. The Warrantholder and any assignee, by acceptance of this Warrant or a
new Warrant, acknowledge and agree that, by reason of the provisions of this
paragraph, following exercise of any portion of this Warrant, the number of
Warrant Shares which may be purchased upon exercise of this Warrant may be less
than the number of Warrant Shares set forth on the face hereof.
Section 4. Compliance with the Securities Act. Neither this Warrant nor
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the Common Stock issued upon exercise hereof nor any other security issued or
issuable upon exercise of this Warrant may be offered or sold except as provided
in this agreement and in conformity with the Securities Act. The Company may
cause the legend set forth on the first page of this Warrant to be set forth on
each Warrant or similar legend on any security issued or issuable upon exercise
of this Warrant until the Warrant Shares have been registered for resale
pursuant to the Registration Rights Agreement or until Rule 144(k) under the
Securities Act is available, unless counsel for the Company is of the opinion as
to any such security that such legend is unnecessary.
Section 5. Payment of Taxes. The Company will pay any documentary
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stamp taxes attributable to the initial issuance of Warrant Shares issuable upon
the exercise of the
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Warrant; provided, however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issuance or delivery of any certificates for Warrant Shares in a name other than
that of the registered holder of this Warrant in respect of which such shares
are issued, and in such case, the Company shall not be required to issue or
deliver any certificate for Warrant Shares or any Warrant until the person
requesting the same has paid to the Company the amount of such tax or has
established to the Company's satisfaction that such tax has been paid. The
holder shall be responsible for income taxes due under federal or state law, if
any such tax is due.
Section 6. Mutilated or Missing Warrants. In case this Warrant shall be
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mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
Section 7. Reservation of Common Stock. The Company hereby represents
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and warrants that there have been reserved, and the Company shall at all
applicable times keep reserved, out of the authorized and unissued Common Stock,
a number of shares sufficient to provide for the maximum potential exercise of
the rights of purchase represented by the Warrant (without regard to the
limitations on exercise set forth herein), and the transfer agent for the Common
Stock ("Transfer Agent"), and every subsequent transfer agent for the Common
Stock or other shares of the Company's capital stock issuable upon the exercise
of any of the right of purchase aforesaid, shall be irrevocably authorized and
directed at all times to reserve such number of authorized and unissued shares
of Common Stock as shall be requisite for such purpose. The Company agrees that
all Warrant Shares issued upon exercise of the Warrant shall be, at the time of
delivery of the certificates for such Warrant Shares, duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock of the Company. The
Company will keep a conformed copy of this Warrant on file with the Transfer
Agent and with every subsequent transfer agent for the Common Stock or other
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrant. The Company will supply from time to
time the Transfer Agent with duly executed stock certificates required to honor
the outstanding Warrant.
Section 8. Warrant Price. The Warrant Price, subject to adjustment
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as provided in Section 9, shall, if payment is made in cash or by certified
check, be payable in lawful money of the United States of America.
Section 9. Adjustments. Subject and pursuant to the provisions of
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this Section 9, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
(a) If the Company shall at any time or from time to time while the
Warrant is outstanding, pay a dividend or make a distribution on its Common
Stock in shares of Common Stock, subdivide its outstanding shares of Common
Stock into a greater number of shares or
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combine its outstanding shares into a smaller number of shares or issue by
reclassification of its outstanding shares of Common Stock any shares of its
capital stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
then the number of Warrant Shares purchasable upon exercise of the Warrant and
the Warrant Price in effect immediately prior to the date upon which such change
shall become effective, shall be adjusted by the Company so that the
Warrantholder thereafter exercising the Warrant shall be entitled to receive the
number of shares of Common Stock or other capital stock which the Warrantholder
would have received if the Warrant had been exercised immediately prior to such
event. Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) If any capital reorganization, reclassification of the capital
stock of the Company, consolidation or merger of the Company with another
corporation, or sale, transfer or other disposition of all or substantially all
of the Company's assets to another corporation shall be effected, then, as a
condition of such reorganization, reclassification, consolidation, merger, sale,
transfer or other disposition, lawful and adequate provision shall be made
whereby each Warrantholder shall thereafter 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 immediately theretofore issuable upon exercise of the
Warrant (whether or not then exercisable), such shares of stock, securities or
assets as would have been issuable or payable with respect to or in exchange for
a number of Warrant Shares equal to the number of Warrant Shares immediately
theretofore issuable upon exercise of the Warrant (whether or not then
exercisable), had such reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
each Warrantholder to the end that the provisions hereof (including, without
limitations, 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, securities or properties thereafter deliverable upon the exercise
hereof. The Company shall not effect any such consolidation, merger, sale,
transfer or other disposition unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the corporation purchasing or
otherwise acquiring such assets or other appropriate corporation or entity shall
assume, by written instrument executed and delivered to the Company, the
obligation to deliver to the holder of the Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
holder may be entitled to purchase and the other obligations under this Warrant.
The provisions of this paragraph (b) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales, transfers or
other dispositions.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 9(a)), or
subscription rights or warrants, the Warrant Price to be in effect after such
record date shall be determined by multiplying the Warrant Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the total number of shares of Common Stock
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outstanding multiplied by the Fair Market Value per share of Common Stock (as
defined below), less the fair market value (as determined by the Company's Board
of Directors in good faith) of said assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants, and the denominator of
which shall be the total number of shares of Common Stock outstanding multiplied
by such current Fair Market Value per share of Common Stock. Such adjustment
shall be made successively whenever such a record date is fixed. For this
purpose, the "Fair Market Value" of the Common Stock shall be the closing price
of the Common Stock as reported by the Nasdaq National Market (or other
Principal Market) on the Trading Day immediately preceding such event.
(d) In the event that the Company or any of its subsidiaries
(A) issues or sells any Common Stock or Convertible Securities or (B) directly
or indirectly effectively reduces the conversion, exercise or exchange price for
any Convertible Securities which are currently outstanding, at or to an
effective Per Share Selling Price which is less than the greater of (I) the
closing sale price per share of the Common Stock on the Principal Market on the
Trading Day next preceding such issue or sale or, in the case of issuances to
holders of its Common Stock, the date fixed for the determination of
stockholders entitled to receive such warrants, rights, or options ("Closing
Price"), or (II) the Warrant Price, then in each such case the Warrant Price in
effect immediately prior to such issue or sale or record date, as applicable,
shall be automatically reduced effective concurrently with such issue or sale to
an amount determined by multiplying the Warrant Price then in effect by a
fraction, (x) the numerator of which shall be the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such issue or sale, plus
(2) the number of shares of Common Stock which the aggregate consideration
received by the Company from Persons other than the holders of Warrants for such
additional shares would purchase at such Closing Price or Warrant Price, as the
case may be, and (y) the denominator of which shall be the number of shares of
Common Stock of the Company outstanding immediately after such issue or sale
(excluding any shares outstanding or deemed outstanding which were issued or
deemed issued to the holders of Warrants as part of such issue or sale). Upon
consummation of a Change in Control Transaction (as defined in the Notes), the
provisions of clause (I) in the first sentence of this Section 9(d) shall cease
to have any further force or effect.
The foregoing provision shall not apply to any issuances or sales of
Common Stock or Convertible Securities in any transaction described in clauses
(i) through (viii) of the definition of Excluded Transaction (as defined in the
Notes) or in any transaction described in clause (ix) of the definition of
Excluded Transaction where the Per Share Selling Price is greater than the then
applicable Warrant Price.
For the purposes of the foregoing adjustments, in the case of the
issuance of any Convertible Securities, the maximum number of shares of Common
Stock issuable upon exercise, exchange or conversion of such Convertible
Securities shall be deemed to be outstanding, provided that no further
adjustment shall be made upon the actual issuance of Common Stock upon exercise,
exchange or conversion of such Convertible Securities.
For purposes of this Section 9(d), if an event occurs that triggers
more than one of the above adjustment provisions, then only one adjustment shall
be made and the calculation method which yields the greatest downward adjustment
in the Warrant Price shall be used.
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(e) An adjustment shall become effective immediately after the record
date in the case of each dividend or distribution and immediately after the
effective date of each other event which requires an adjustment.
(f) In the event that, as a result of an adjustment made pursuant to
Section 9, the holder of this Warrant shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock, the
number of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.
(g) In the event of any adjustment in the number of Warrant Shares
issuable hereunder upon exercise, the Warrant Price shall be inversely
proportionately increased or decreased, as the case may be, such that the
aggregate purchase price for Warrant Shares upon full exercise of this Warrant
shall remain the same. Similarly, in the event of any adjustment in the Warrant
Price, the number of Warrant Shares issuable hereunder upon exercise shall be
inversely proportionately increased or decreased, as the case may be, such that
the aggregate purchase price for Warrant Shares upon full exercise of this
Warrant shall remain the same.
(h) All adjustments pursuant to this Section 9 shall be made pro rata
among Tranches.
Section 10. Fractional Interest. The Company shall not be required to
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issue fractions of Warrant Shares upon the exercise of the Warrant. If any
fraction of a Warrant Share would, except for the provisions of this Section, be
issuable upon the exercise of the Warrant (or specified portions thereof), the
Company shall round such calculation to the nearest whole number and disregard
the fraction.
Section 11. Benefits. Nothing in this Warrant shall be construed to
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give any person, firm or corporation (other than the Company and the
Warrantholder) any legal or equitable right, remedy or claim, it being agreed
that this Warrant shall be for the sole and exclusive benefit of the Company and
the Warrantholder.
Section 12. Notices to Warrantholder. Upon the happening of any event
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requiring an adjustment of the Warrant Price, the Company shall forthwith give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. In the event of a dispute with respect to any such
calculation, the certificate of the Company's independent certified public
accountants shall be conclusive evidence of the correctness of any computation
made, absent manifest error. Failure to give such notice to the Warrantholder or
any defect therein shall not affect the legality or validity of the subject
adjustment. At the Warrantholder's request, the Company shall deliver to the
Warrantholder as of a requested date a notice specifying the Warrant Price and
the number of Warrant Shares into which this Warrant is exercisable as of such
date.
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Section 13. Identity of Transfer Agent. The Transfer Agent for the
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Common Stock is:
EquiServe Trust Company, N.A.
150 Royall Street
Canton, MA 02021
Telephone: 781-575-2000
Fax: 781-575-2420
Forthwith upon the appointment of any subsequent transfer agent for the
Common Stock or other shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrant, the Company will
fax to the Warrantholder a statement setting forth the name and address of such
transfer agent.
Section 14. Notices. Any notice pursuant hereto to be given or made by
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the Warrantholder to or on the Company shall be sufficiently given or made
personally or if sent by an internationally recognized courier by next day or
two day delivery service, addressed as follows:
Genome Therapeutics Corp.
100 Beaver Street
Waltham, Massachusetts 02453
Telephone: (781) 398-2300
Fax: (781) 893-8277
Attention: Stephen Cohen, CFO
or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 14.
Any notice pursuant hereto to be given or made by the Company to or on
the Warrantholder shall be sufficiently given or made if personally delivered or
if sent by an internationally recognized courier service by overnight or two-day
service, to the address set forth on the books of the Company or, as to each of
the Company and the Warrantholder, at such other address as shall be designated
by such party by written notice to the other party complying as to delivery with
the terms of this Section 14.
All such notices, requests, demands, directions and other communications shall,
when sent by courier, be effective two (2) days after delivery to such courier
as provided and addressed as aforesaid.
Section 15. Registration Rights. The initial holder of this Warrant is
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entitled to the benefit of certain registration rights in respect of the Warrant
Shares as provided in the Registration Rights Agreement.
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Section 16. Successors. All the covenants and provisions hereof by or
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for the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 17. Governing Law. This Warrant shall be deemed to be a
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contract made under the laws of the State of New York, without giving effect to
its conflict of law principles, and for all purposes shall be construed in
accordance with the laws of said State.
Section 18. 9.9% and 19.9% Limitations.
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(a) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the holder upon
exercise pursuant to the terms hereof shall not exceed a number that, when added
to the total number of shares of Common Stock deemed beneficially owned by such
holder (other than by virtue of the ownership of securities or rights to acquire
securities (including the Warrant Shares) that have limitations on the holder's
right to convert, exercise or purchase similar to the limitation set forth
herein), together with all shares of Common Stock deemed beneficially owned
(other than by virtue of the ownership of securities or rights to acquire
securities that have limitations on the right to convert, exercise or purchase
similar to the limitation set forth herein) by the holder's "affiliates" (as
defined in Rule 144 of the Securities Act) ("Aggregation Parties") that would be
aggregated for purposes of determining whether a group under Section 13(d) of
the Securities Exchange Act of 1934, as amended, exists, would exceed 9.9% of
the total issued and outstanding shares of the Common Stock (the "Restricted
Ownership Percentage"). Each holder shall have the right (w) at any time and
from time to time to reduce its Restricted Ownership Percentage immediately upon
notice to the Corporation and (x) (subject to waiver) at any time and from time
to time, to increase its Restricted Ownership Percentage immediately in the
event of the announcement as pending or planned, of a Change of Control
Transaction.
(b) Notwithstanding anything contained herein to the contrary, the
number of shares of Common Stock issuable by the Company and acquirable by the
holders of all Warrants, together with the number of shares issued under all the
Notes, shall not exceed 19.9% of the number of shares of Common Stock
outstanding on the Closing Date, subject to appropriate adjustment for stock
splits, stock dividends, or other similar recapitalizations affecting the Common
Stock (the "Maximum Common Stock Issuance"), unless the issuance of shares
hereunder in excess of the Maximum Common Stock Issuance shall first be approved
by the Company's shareholders in accordance with applicable law and the By-laws
and Articles of Incorporation of the Company. Each holder of Warrants shall be
entitled to receive the number of Warrant Shares, together with its Underlying
Shares under the Related Note held by it, equal to such holder's pro rata share
of the Maximum Common Stock Issuance (based upon its aggregate Purchase Price
under the Purchase Agreement). Once a holder has received its total pro rata
share upon conversion of its Notes and exercise of its Warrants, and if the
Company shall not have complied with its obligations to obtain the stockholder
approval described below by the date set forth below, it shall have the right to
compel the Company to redeem its remaining Notes and Warrants at a price equal
to the Mandatory Redemption Price (as defined in below). If a holder has
converted and exercised all of its Notes and Warrants, but has not depleted the
total number of pro rata shares allocated to it hereunder, its remaining pro
rata
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shares shall be reallocated amongst the other holder still holding Notes and
Warrants on a pro rata basis. If at any point in time and from time to time
(each a "Trigger Date") the number of Underlying Shares issued pursuant to
conversion of the Notes and exercise of the Warrants, together with the number
of Underlying Shares that would then be issuable by the Company in the event of
conversion of all the Notes and exercise of all the Warrants then outstanding,
would exceed the Maximum Common Stock Issuance but for this Section 3(j)(B),
then the Company shall, at the Company's election, either (A) promptly call a
shareholders meeting to obtain shareholder approval for the issuance of
Underlying Shares and Warrant Shares in excess of the Maximum Common Stock
Issuance, which such shareholder approval shall be obtained within 90 days of
the Trigger Date, or (B) purchase from the holders of Notes and Warrants on a
pro rata basis such Notes and Warrants to the extent that they cannot be
converted or exercised (such number of Warrant Shares which would, if permitted
to be issued, exceed the holder's pro rata share of the Maximum Common Stock
Issuance is hereinafter referred to as "Excess Shares"). Within ten (10) days
following any occurrence of Excess Shares (if no shareholder approval is sought)
or after the expiration of the 90-day period to obtain shareholder approval (if
shareholder approval is sought and not obtained), the Company shall promptly pay
to the Warrantholder, in lieu of the Warrantholder's right to receive such
Excess Shares, an amount equal to 100% of the difference between (a) the number
of Excess Shares multiplied by the closing sale price per share of Common Stock
on the Principal Market on the trading day immediately preceding the date of the
exercise of this Warrant, and (b) the aggregate exercise price for such Excess
Shares. Only shares of Common Stock acquired pursuant to the Purchase Agreement
(including Underlying Shares and Warrant Shares) will be included in determining
whether the limitation contained herein would be exceeded for purposes of this
Section 18(b). (Redemption of the Related Note shall be governed by the terms
set forth therein.)
Section 19. Replacement Warrants. The Company agrees that within ten
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(10) business days after any request from time to time of the Warrantholder, it
shall deliver to such holder a new Warrant in substitution of this Warrant which
is identical in all respects except that the then Warrant Price shall be
appropriately specified in the Warrant and the number of Warrant Shares into
which this Warrant is or may become exercisable shall be appropriately specified
in the Warrant. Such changes are intended not as amendments to the Warrant but
only as clarification of the foregoing numbers for convenience purposes, and
such changes shall not affect any provisions concerning adjustments to the
Warrant Price or number of Warrant Shares contained herein.
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Section 20. Absolute Obligation to Issue Warrant Shares. The Company's
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obligations to issue and deliver Warrant Shares in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by
the holder hereof to enforce the same, any waiver or consent with respect to any
provision hereof (other than a waiver of the issuance or delivery of shares),
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim or recoupment, or any breach or alleged breach
by the holder hereof or any other Person of any obligation to the Company or any
violation or alleged violation of law by the holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the holder hereof in connection with the issuance
of Warrant Shares. The Company will at no time close its shareholder books or
records in any manner which interferes with the timely exercise of this Warrant.
[Signature Page Follows]
11
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of March __, 2002.
GENOME THERAPEUTICS CORP.
By:
______________________________
Name:
Title:
Attest:
Sign:
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Print Name:
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GENOME THERAPEUTICS CORP.
WARRANT EXERCISE FORM
Genome Therapeutics Corp.
100 Beaver Street
Waltham, Massachusetts 02453
Telephone: (718) 398-2300
Fax: (718) 893-8277
Attention: Stephen Cohen, CFO
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by (CHECK AS APPLICABLE):
[ ] payment by cash, wire transfer or certified check,
[ ] Cashless Exercise of the within Warrant pursuant to Section 3(c)
of the Warrant,
_______________ shares of Common Stock* ("Warrant Shares") provided for therein,
and requests that certificates for the Warrant Shares be issued as follows:
Name:
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Address:
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and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares (subject to book-entry) be delivered to the undersigned.
In lieu of delivering physical certificates representing the Warrant
Shares purchasable upon exercise of this Warrant, provided the Company's
transfer agent is participating in the Depository Trust Company ("DTC") Fast
Automated Securities Transfer ("FAST") program, upon request of the Holder, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares issuable upon conversion or exercise to the
undersigned, by crediting the account of the undersigned's prime broker with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system.
Dated: Signature:
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Name (please print)
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Address
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* NOTE: If exercise of the Warrant is made by surrender of the Warrant and the
number of shares indicated exceeds the maximum number of shares to which a
holder is entitled, the Company will issue such maximum number of shares
purchasable upon exercise of the Warrant registered in the name of the
undersigned Warrantholder or the undersigned's Assignee as below indicated
and deliver same to the address stated below.