THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE
SECURITIES LAWS (THE "STATE ACTS"), AND SHALL NOT BE SOLD OR OTHERWISE
TRANSFERRED BY THE HOLDER EXCEPT BY REGISTRATION OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UPON THE ISSUANCE TO THE COMPANY OF AN OPINION OF COUNSEL OR
OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY
SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT AND THE STATE
ACTS.
Warrant to Purchase
100,000 shares of Common Stock
Dated: June 3, 2004
WARRANT
TO
PURCHASE COMMON STOCK
OF
ELITE PHARMACEUTICALS, INC.
This certifies that, for good and valuable consideration, Elite
Pharmaceuticals, Inc, a Delaware corporation (the "COMPANY"), grants to D.H.
Blair Investment Banking Corp. or its registered assigns (the "WARRANTHOLDER"),
the right to subscribe for and purchase from the Company One Hundred Thousand
(100,000) shares (the "WARRANT SHARES") of common stock, par value $0.01 per
share, of the Company ("COMMON STOCK") at the exercise price of $2.50 per share
(subject to adjustment as provided herein, the "EXERCISE PRICE"). This Warrant
shall be exercisable from and after 9:00 A.M., Eastern Standard Time on June 3,
2004, but no later than June 3, 2009, to and including 5:00 P.M. (the
"EXPIRATION DATE"). The Exercise Price and the number of Warrant Shares are
subject to adjustment from time to time as provided in Section 6.
SECTION 1. EXERCISE OF WARRANT; LIMITATION ON EXERCISE; TAXES; TRANSFER;
DIVISIBILITY.
1.1. EXERCISE OF WARRANT. This Warrant is immediately exercisable and
may be exercised, in whole or in part, at any time on or prior to the Expiration
Date. The rights represented by this Warrant may be exercised by the
Warrantholder of record, in whole or in part, from time to time, by (a)
surrender of this Warrant, accompanied by the Exercise Form annexed hereto (the
"EXERCISE FORM") duly executed by the Warrantholder of record and specifying the
number of Warrant Shares to be purchased to the Company at its offices at 165
Ludlow Avenue, Northvale, New Jersey 07647 (or such other office or agency of
the Company as it may designate by notice to the Warrantholder at the address of
such
Warrantholder appearing on the books of the Company) during normal business
hours on any day (a "BUSINESS DAY") other than a Saturday, Sunday or a day on
which the American Stock Exchange is authorized to close or on which the Company
is otherwise closed for business but not later than 5:00 P.M. on the Expiration
Date; (b) payment of the Exercise Price by (i) delivery to the Company in cash
or by certified or official bank check in New York Clearing House Funds, of an
amount equal to the Exercise Price for the number of Warrant Shares specified in
the Exercise Form or (ii) notice that the Warrantholder elects to effect a
cashless exercise as contemplated by subsection 1.5, and (c) such documentation
as to the identity and authority of the Warrantholder as the Company may
reasonably request. Such Warrant Shares shall be deemed by the Company to be
issued to the Warrantholder as the record holder of such Warrant Shares as of
the close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid. Certificates
for the Warrant Shares specified in the Exercise Form shall be delivered to the
Warrantholder as promptly as practicable. The stock certificates so delivered
shall be in denominations as may be specified by the Warrantholder and shall be
issued in the name of the Warrantholder or, if permitted by subsection 1.4 and
in accordance with the provisions thereof, such other name as shall be
designated in the Exercise Form. If this Warrant shall have been exercised only
in part, the Company shall, at the time of delivery of the certificates for the
Warrant Shares, deliver to the Warrantholder a new Warrant evidencing the rights
to purchase the remaining Warrant Shares, which new Warrant shall in all other
respects be identical with this Warrant.
1.2. LIMITATION ON EXERCISE. If this Warrant is not exercised prior to
5:00 P.M. on the Expiration Date, this Warrant, or any new Warrant issued
pursuant to subsection 1.1, shall cease to be exercisable and shall become void,
and all rights of the Warrantholder hereunder shall cease.
1.3. PAYMENT OF TAXES. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; PROVIDED, HOWEVER, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
1.4. RESTRICTIONS ON TRANSFER. Neither this Warrant nor any of the
Warrant Shares may be transferred or sold except in compliance with applicable
United States federal and state securities laws. Subject to the foregoing, this
Warrant and all rights hereunder are transferable, in whole or in part, by the
Warrantholder and any such transfer is registrable at the office of the Company
by the holder hereof in person or by its duly authorized attorney, upon
surrender of this Warrant in accordance with Section 3 hereof.
1.5. CASHLESS EXERCISE. At the option of the Warrantholder, the
Warrantholder may exercise this Warrant, without a cash payment of the Exercise
Price, through a reduction in the number of Warrant Shares issuable upon the
exercise of the Warrant. Such reduction may be effected by designating that the
number of the shares of Common Stock issuable to the Warrantholder upon such
exercise shall be reduced by the number of shares having an aggregate Fair
Market Value as of the date of exercise equal to the amount of the aggregate
Exercise Price
-2-
for such exercise as to the number of shares to be issued to the Warrant holder
upon such exercise. For purposes of this Warrant, the "FAIR MARKET VALUE" of any
Common Stock on any date in question shall be the closing sale price of the
Common Stock on the principal stock exchange or stock market on which the Common
Stock is traded on the Business Day immediately preceding such date (or if there
is not trading on such date, on the next preceding Business Day on which there
was trading in the Common Stock), as quoted in THE WALL STREET JOURNAL. If the
Common Stock is not listed or qualified for trading on a stock exchange or stock
market at such time, then the Fair Market Value shall be determined in good
faith by the Board of Directors of the Company. In connection with any cashless
exercise, no cash or other consideration will be paid by the Warrantholder in
connection with such exercise other than the surrender of the Warrant itself,
and no commission or other remuneration will be paid or given by the
Warrantholder or the Company in connection with such exercise.
SECTION 2. RESERVATION AND LISTING OF SHARES.
All Warrant Shares issued upon the exercise of the rights represented by
this Warrant shall, upon issuance and payment of the Exercise Price in cash or
pursuant to subsection 1.5, be validly issued, fully paid and nonassessable and
free from all taxes, liens, security interests, charges and other encumbrances
with respect to the issuance thereof other than taxes in respect of any transfer
occurring contemporaneously with such issuance. During the period within which
this Warrant may be exercised, the Company shall at all times have authorized
and reserved, and keep available and free from preemptive or similar rights, a
sufficient number of shares of Common Stock to provide for the exercise of this
Warrant.
SECTION 3. EXCHANGE, LOSS OR DESTRUCTION OF WARRANT.
If permitted by subsection 1.4, upon surrender of this Warrant to the
Company with a duly executed instrument of assignment and funds sufficient to
pay any transfer tax, the Company shall, without charge, execute and deliver a
new Warrant of like tenor in the name of the assignee named in such instrument
of assignment and this Warrant shall promptly be canceled. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant and, if requested by the Company, an
agreement to indemnify the Company for any loss resulting from the Warrant to be
replaced, the Company will execute and deliver a new Warrant of like tenor.
SECTION 4. OWNERSHIP OF WARRANT.
The Company may deem and treat the person or entity in whose name this
Warrant is registered as the holder and owner hereof (notwithstanding any
notations of ownership or writing hereon made by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer as provided in
subsection 1.1 or in Section 3.
-3-
SECTION 5. CERTAIN ADJUSTMENTS.
The Exercise Price at which Warrant Shares may be purchased hereunder and
the number of Warrant Shares to be purchased upon exercise hereof are subject to
change or adjustment as follows:
5.1. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly send by first class mail, postage prepaid, to the
Warrantholder, notice of such adjustment.
5.2. PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION. In
case of any consolidation of the Company with or merger of the Company into
another entity or in case of any sale, transfer or lease to another entity of
all or substantially all the assets, the Warrantholder shall have the right
thereafter upon payment of the Exercise Price in effect immediately prior to
such action to receive upon exercise of this Warrant the kind and amount of
shares and other securities and property which a holder of a number of shares of
Common Stock equal to the number as to which this Warrant is exercised would be
entitled to receive after the happening of such consolidation, merger, sale,
transfer or lease had this Warrant been exercised immediately prior to such
action, subject to future adjustments, which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 5. The provisions of
this subsection 5.2 shall apply similarly to successive consolidations, mergers,
sales, transfers or leases.
5.3. ADJUSTMENTS.
(a) STOCK DIVIDENDS, DISTRIBUTIONS OR SUBDIVISIONS. In the event the
Company shall issue additional shares of Common Stock pursuant to a stock
dividend, stock distribution, subdivision, share split or reclassification,
concurrently with the effectiveness of such event, the Exercise Price in effect
immediately prior to such event shall be proportionately decreased with the
number of Warrant Shares purchasable upon exercise of this Warrant immediately
prior to such event and the number of shares underlying the Warrant shall be
proportionately increased.
(b) COMBINATIONS OR CONSOLIDATIONS. In the event the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification,
reverse split or otherwise, into a lesser number of shares of Common Stock,
concurrently with the effectiveness of such event, the Exercise Price in effect
immediately prior to such event shall be proportionately increased and the
number of Warrant Shares purchasable upon exercise of this Warrant immediately
prior to such event shall be proportionately decreased.
-4-
SECTION 6. REGISTRATION RIGHTS.
6.1. PIGGYBACK REGISTRATION. If at any time or from time to time, the
Company shall register the sale of any of its Common Stock under the Securities
Act of 1933 (the "SECURITIES ACT") for its own account or the account of any of
its security holders, other than a registration on Form S-8 relating solely to
an employee benefit plan or a registration on Form S-4 relating solely to a
transaction under Rule 145 of the Securities Act, the Company will:
(i) give to the initial Warrantholder and each other person or entity
who holds all or any portion of this Warrant or the Warrant Shares
(collectively with the initial Warrantholder, the "HOLDERS")
written notice thereof as soon as practicable prior to filing the
registration statement or offering statement, but in any event not
later than 10 days prior to such filing; and
(ii) on behalf of all entities requesting inclusion in such offering,
include the Registrable Securities (as defined in Section 6.2) in
the offering and may condition such offer on their acceptance of
any other reasonable conditions (including, without limitation, if
such offering is underwritten, that such requesting holders agree
in writing to enter into an underwriting agreement with customary
terms). If the representative of the underwriter advises the
Company in writing that marketing factors require a limitation on
the number of shares to be underwritten, the numbers of shares to
be included in the underwriting or registration shall be allocated
first to the Company, second, to the Company's security holders
that triggered the instant registration (the "TRIGGERING HOLDERS")
and thereafter shall be allocated among the Holders and other
security holders requesting inclusion in the offering pro rata on
the basis of the number of shares each requesting Holder and other
security holder requests to be included bears to the total number
of shares of all requesting holders that have been requested to be
included in such offering (to the extent not included as a
Tiggering Holder). If a person who has requested inclusion in such
offering as provided above does not agree to the terms of any such
underwriting, such person shall be excluded therefrom by written
notice from the Company or the underwriter. The securities so
excluded shall also be withdrawn from registration, if applicable.
6.2. REGISTRABLE SECURITIES. For the purposes of this Section 6, the
term "REGISTRABLE SECURITIES" shall mean any Warrant Shares issued or issuable
to a Holder upon exercise of its Warrant, any shares of Common Stock issued to a
Holder as a dividend on its Warrant Shares, and any other shares of Common Stock
distributable on, with respect to, or in replacement of or substitution for such
Registrable Securities, including those that have been transferred as permitted
under this Warrant, except for those that have been sold or transferred pursuant
to an effective registration statement or as may be resold pursuant to Rule
144(k) under the Securities Act.
6.3. OBLIGATIONS OF A HOLDER AND OTHERS IN A REGISTRATION. (a) Each
Holder agrees to timely furnish such information regarding such person and the
securities sought to be registered and to take such other action as the Company
may reasonably request, including the entering into of agreements and the
providing of documents, in connection with the
-5-
registration or qualification of such securities and/or the compliance of such
registration statement with all applicable laws. Such Holders severally agree
that, in connection with any offering undertaken pursuant to subsection 6.1, the
Company shall have the right to, if it deems an underwriter or underwriters
necessary or appropriate, designate such underwriter(s). If the registration
involves an underwriter, each participating Holder agrees, upon the request of
such underwriter, not to sell any unregistered securities of the Company for a
period of up to 180 days following the effective date of the registration
statement for such offering (provided that all executive officers, directors and
holders of greater than 5% of the fully diluted capital stock of the Company
shall be subject to a similar restriction) and to enter into an underwriting
agreement with such underwriters containing customary terms and provisions.
(b) If at any time after giving written notice of its intention to
register any Registrable Securities and prior to the effective date of such
registration statement, the Company shall determine for any reason not to
register or to delay registration of such Registrable Securities, the Company
may, at its election, give written notice of such determination to each Holder
and in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration, without prejudice as to a Holder's rights with respect to any
future registration.
6.4. INDEMNIFICATION.
(a) Subject to applicable law, the Company will indemnify each Holder,
each underwriter and each person controlling such Holder or underwriter against
all claims, losses, damages and liabilities, including legal and other expenses
reasonably incurred, arising out of any untrue or allegedly untrue statement of
a material fact contained in the registration statement, or any omission or
alleged omission to state a material fact required to be stated in the
registration statement or necessary to make any statements therein not
misleading, or arising out of any violation by the Company of the Securities
Act, any state securities or "blue sky" laws or any applicable rule or
regulation, except with respect to an untrue statement or omission contained in
any information or affidavit furnished in writing by the Holder for inclusion in
such registration statement.
(b) Subject to applicable law, each Holder, severally and not jointly,
will indemnify the Company, and each person controlling the Company, against all
claims, losses, damages and liabilities, including legal and other expenses
reasonably incurred, arising out of any untrue or allegedly untrue statement of
a material fact contained in the registration statement, or required to be
stated in the registration statement or necessary to make the statements
contained therein not misleading, to the extent, but only to the extent, that
such untrue statement or omission is contained in any information or affidavit
furnished in writing by such Holder to the Company specifically for inclusion in
such registration statement.
-6-
6.5. TRANSFER OF REGISTRATION RIGHTS. The registration rights of a
Holder under Section 6 hereof shall automatically be transferred to any
transferee of this Warrant, or any portion thereof, or of any Registrable
Securities, without any notice or other action by the transferring Holder of
such transferee. Any such transferee will be deemed to be a Holder for purposes
of this Section 6, and as a condition precedent to such transferee's exercise of
its rights hereunder, such transferee must agree to be bound by the terms of
this Section 6.
6.6. EXPENSES OF REGISTRATION. The expenses incurred in connection with
registrations pursuant to this Section 6, namely all registration fees, federal
and state filing and qualification fees, printing expenses, fees and
disbursements of counsel for the Company and expenses of any special audits of
the Company's financial statements incidental to or required by such
registration, shall be borne by the Company, except that the Company shall not
be required to pay the fees and disbursements of counsel for the Holder or
Holders or underwriters' discounts or commissions relating to Registrable
Securities being sold by any Holders.
SECTION 7. MISCELLANEOUS.
7.1. ENTIRE AGREEMENT. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2. BINDING EFFECTS; BENEFITS. This Warrant shall inure to the benefit
of and shall be binding upon the Company and the Warrantholder and their
respective heirs, legal representatives, successors and assigns. Nothing in this
Warrant, expressed or implied, is intended to or shall confer on any person or
entity other than the Company, the Warrantholder and their respective heirs,
legal representatives, successors or assigns, any rights, remedies, obligations
or liabilities under or by reason of this Warrant.
7.3. AMENDMENTS. This Warrant may not be modified or amended except by
a written instrument signed by the Company and the Warrantholder.
7.4. SECTION AND OTHER HEADINGS. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
7.5. FURTHER ASSURANCES. Each of the Company and the Warrantholder
shall do and perform all such further acts and things and execute and deliver
all such other certificates, instruments and/or documents as any party hereto
may reasonably request in connection with the performance of the provisions of
this Warrant.
7.6. NOTICES. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be writing and shall
be deemed to have been duly given if delivered personally, sent by confirmed
facsimile or sent by United States certified or registered first class mail,
postage prepaid, to the parties hereto at the following addresses or at such
other address as any party hereto shall hereafter specify by notice to the other
party hereto:
(a) if to the Company, addressed to:
-7-
Elite Pharmaceuticals, Inc.
165 Ludlow Avenue
Northvale, New Jersey 07647
Attention: Chief Executive Officer
(b) If to the Warrantholder, addressed to the address of such person
appearing on the books of the Company.
Except as otherwise provided herein, all such demands, requests, notices
and other communications shall be deemed to have been received on the date of
personal delivery thereof, the sending of confirmed facsimile thereof or on the
third Business Day after the mailing thereof.
7.7. SEPARABILITY. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall be ineffective in such
jurisdiction to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the Fair Market Value of a share of Common Stock as of the date of
such exercise.
7.9. GOVERNING LAW. This Warrant shall be interpreted and the rights
and liabilities of the parties hereto determined in accordance with the laws of
the United States applicable thereto and the internal laws of the State of New
York (other than its choice of law rules). The Company and Warrantholder consent
that all service of process may be made by registered mail directed to such
party at its address set forth in subsection 7.6 above.
7.10. COUNTERPARTS. This Warrant may be separately executed in
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Warrant.
-8-
IN WITNESS WHEREOF, the Company and the initial Warrantholder have caused this
Warrant to be signed by their duly authorized officers as of the 3rd day of
June, 2004.
ELITE PHARMACEUTICALS, INC.
By:
-------------------------------------
Bernard Berk, Chief Executive Officer
Acknowledged and Agreed
this ___ day of June, 2004:
D.H. BLAIR INVESTMENT BANKING CORP.
By:
--------------------------------
Name:
Title:
-9-
ELITE PHARMACEUTICALS, INC.
WARRANT EXERCISE FORM
(To be executed upon exercise Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase _________ of the Warrant Shares and herewith pays the Exercise Price in
accordance with the terms of this Warrant by (check one):
[_] tendering payment for such Warrant Shares to the order of ELITE
PHARMACEUTICALS, INC. in the amount of $______________.
[_] surrendering the undersigned's purchase rights with respect to
______ Warrant Shares, having an aggregate Fair Market Value as of the date of
this exercise of $________________, which equals or exceeds the aggregate
Exercise Price of the Warrant Shares being purchased, as permitted by subsection
1.5 of the Warrant.
The undersigned requests that a certificate for the Warrant Shares being
purchased be registered in the name of ________________ and that such
certificate be delivered to _____________.
Date _____________ Signature ________________________
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
all of the rights of the undersigned under the within Warrant, with respect to
the number of shares of Common Stock covered thereby set forth below, to:
Name of Assignee Address No. of Shares
----------------------------------------------------------
and hereby irrevocable constitutes and appoints ________________ as agent and
attorney-in-fact to transfer said Warrant on the books of Elite Pharmaceuticals,
Inc., with full power of substitution in the premises.
Dated
--------------------
In the presence of
- -------------------------
Name:
--------------------------------------
Signature:
---------------------------------
Title of Signing Offer or Agent (if any):
Address:
----------------------------------
----------------------------------
Note: The above signature should correspond
with the name on the face of the
within Warrant.