THE SECURITIES REPRESENTED BY THIS WARRANT AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR WITH ANY STATE SECURITIES
COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE HOLDER IN THE
ABSENCE OF A REGISTRATION STATEMENT WHICH IS EFFECTIVE UNDER THE SECURITIES ACT
AND APPLICABLE STATE LAWS AND RULES, OR, UNLESS, IMMEDIATELY PRIOR TO THE TIME
SET FOR TRANSFER, SUCH TRANSFER MAY BE EFFECTED WITHOUT VIOLATION OF THE
SECURITIES ACT AND OTHER APPLICABLE STATE LAWS AND RULES. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
DATE: _______________ RW-___
WARRANT TO PURCHASE OF _______ SHARES OF
COMMON STOCK OF ELITE PHARMACEUTICALS, INC.
Exercise Price: $3.00 per share, subject to adjustment as provided
below (the "Exercise Price")
THIS IS TO CERTIFY that, for value received, _______________________
and its successors and assigns (collectively, the "Holder"), is entitled to
purchase, subject to the terms and conditions hereinafter set forth, up to
____________ fully paid and nonassessable shares (the "Warrant Shares") of the
common stock, par value $0.01 per share ("Common Stock"), of Elite
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and to receive
certificates for the Common Stock so purchased. This Warrant to Purchase Common
Stock (including any Warrant(s) to Purchase Common Stock issued in exchange,
transfer or replacement hereof, this "Warrant") has been issued pursuant to the
terms and conditions of a Placement Agent Agreement by and between the Company
and Indigo Securities, LLC (the "Placement Agent Agreement").
1. EXERCISE PERIOD. The Holder may purchase all or a portion of the
Warrant Shares pursuant to Section 2 at any time or times on or after the
earlier of (i) the date of the effectiveness of a registration statement
registering the shares of Common Stock underlying this Warrant, in accordance
with the Registration Rights Agreement (as defined in Section 5 below) and (ii)
December 14, 2006 but not after 5:00 p.m., New York time on December 14, 2010
(the "Exercise Period"). This Warrant will terminate automatically upon the
earlier of (i) the expiration of the Exercise Period and (ii) the failure of the
Holder to exercise this Warrant within thirty (30) days after receipt of a
Mandatory Exercise Notice (as defined below) from the Company, as provided in
Section 2(b).
2. EXERCISE OF WARRANT.
(a) MECHANICS OF EXERCISE.
(i) This Warrant may be exercised, in whole or in
part, at any time and from time to time during the Exercise Period.
Such exercise shall be accomplished by:
(x) payment to the Company of an amount
equal to the then applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the
"Aggregate Exercise Price") in cash, by wire transfer to an account
designated by the Company or by certified check or bank cashier's
check, payable to the order of the Company; or
(y) by surrendering all or a portion of the
Warrant using the amount by which the Fair Market Value, as defined,
exceeds the Exercise Price to purchase a number of shares of Common
Stock without the payment of any cash as illustrated in the formula
below in this Section 2 (a "Cashless Exercise"); and
(z) physical delivery of this Warrant with
an original executed Exercise Notice in substantially the form attached
hereto as EXHIBIT A (the "Exercise Notice") to the Company (the
requirements referred to in clauses (x), (y) and (z) being referred to
as the "Exercise Delivery Requirements").
(ii) If the Holder elects to conduct a Cashless
Exercise, the Company shall cause to be delivered to the Holder a certificate or
certificates representing the 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
Holder;
Y = the portion of the Warrant (in number of shares
of Common Stock) being exercised by Holder (at the
date of such calculation) on a cashless basis;
A = the Fair Market Value of one share of Common
Stock on the Exercise Date (as calculated below); and
B = Exercise Price.
For purposes of the above calculation, the Fair Market Value of one share shall
mean: (i) if the principal trading market for such securities is a national
securities exchange, the Nasdaq Stock Market or the Over-the-Counter Bulletin
Board (OCBB) (or a similar system then in use), the average last reported sales
or if only traded on the OCBB, the average last closing price on the
2
principal market for the five trading days immediately prior to the Exercise
Date; or (ii) if (i) is not applicable, and if bid and asked prices for shares
of Common Stock are reported by the National Quotation Bureau, Inc., the average
of the high bid and low asked prices so reported for the five trading days
immediately prior to the Exercise Date. Notwithstanding the foregoing, if there
is no last reported sales or closing price or bid and asked prices, as the case
may be, for the period in question, then the fair market value of one share on
the Exercise Date shall be determined in good faith by, and reflected in a
formal resolution of, the board of directors of the Company.
3. (iii) Upon satisfaction of the Exercise Delivery Requirements, the
Company will (x) transmit to the Company's transfer agent (the "Transfer Agent")
instructions to issue the Warrant Shares in the amount set forth in the Exercise
Delivery Documents and (y) as promptly as possible, but in no event more than
three (3) business days after satisfaction of the Exercise Delivery
Requirements, (A) provided that the Transfer Agent is participating in The
Depository Trust Company ("DTC") Fast Automated Securities Transfer Program,
upon the request of the Holder, credit such aggregate number of shares of Common
Stock to which the Holder is entitled pursuant to such exercise to the Holder's
or its designee's balance account with DTC through its Deposit Withdrawal Agent
Commission system, or (B) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, issue and dispatch by overnight
courier to the address as specified in the Exercise Notice, a certificate or
certificates representing the shares of Common Stock so purchased, registered in
the Company's share register in the name of the Holder or its transferee (as
permitted under Section 3 below), for the number of shares of Common Stock to
which the Holder is entitled pursuant to such exercise. With respect to any
exercise of this Warrant, the Holder will for all purposes be deemed to have
become the holder of record of the number of shares of Common Stock purchased
hereunder on the date this Warrant is delivered to the Company with a properly
executed Exercise Notice and payment of the Exercise Price (the "Exercise
Date"), irrespective of the date of delivery of the certificate evidencing such
shares, except that, if the date of such receipt is a date on which the stock
transfer books of the Company are closed, such Person will be deemed to have
become the holder of such shares at the close of business on the next succeeding
date on which the stock transfer books are open. In the event this Warrant is
exercised in part, the Company shall issue a new Warrant to the Holder covering
the aggregate number of shares of Common Stock as to which this Warrant remains
exercisable for as soon as practicable and in no event later than five (5)
business days after any exercise. The Company shall pay any and all taxes (other
than income or withholding taxes) which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this Warrant.
Fractional shares of Common Stock will not be issued upon the exercise of this
Warrant. In lieu of any fractional shares that would have been issued but for
the immediately preceding sentence, the Holder will be entitled to receive cash
equal to the current Fair Market Value of such fraction of a share of Common
Stock on the trading day immediately preceding the Exercise Date. In the event
this Warrant is exercised in part, the Company shall issue a new Warrant to the
Holder covering the aggregate number of shares of Common Stock as to which this
Warrant remains exercisable for.
(b) MANDATORY EXERCISE. Notwithstanding anything set forth in
this Warrant, at any time during the Exercise Period that (x) the VWAP (as
defined in Section 2(f)) of the Common Stock for any consecutive thirty (30) day
period equals or exceeds 300% of the then applicable Exercise Price, (y) during
such period the average trading volume of the Common
3
Stock on any nationally recognized stock exchange or quotation system equals or
exceeds 50,000 shares per day and (z) the Company shall provide written notice
(a "Mandatory Exercise Notice") to the Holder of the occurrence of such events
within thirty (30) days of the conclusion of such thirty (30) day period, then
the Holder shall exercise, in full, the unexercised portion of this Warrant
within thirty (30) days of the receipt of such Mandatory Exercise Notice and, to
the extent this Warrant is not so exercised by the Holder within such thirty
(30) day period, this Warrant shall terminate automatically and immediately at
the end of such thirty (30) day period.
(c) COMPANY'S FAILURE TO TIMELY DELIVER SECURITIES. Subject to
Section 2(e) and 2(f), if the Company or the Transfer Agent shall fail to issue
to the Holder within five (5) business days of satisfaction of the Exercise
Delivery Requirements a certificate for the number of shares of Common Stock to
which the Holder is entitled and register such shares of Common Stock on the
Company's share register or to credit the Holder's balance account with DTC for
such number of shares of Common Stock to which the Holder is entitled upon the
Holder's exercise of this Warrant, then, in addition to all other remedies
available to the Holder, the Company shall pay in cash to the Holder on each day
after such fifth business day that the issuance of such shares of Common Stock
is not timely effected an amount equal to one percent (1%) of the product of (A)
the sum of the number of shares of Common Stock not issued to the Holder on a
timely basis and to which the Holder is entitled and (B) the Closing Sale Price
of the shares of Common Stock on the trading day immediately preceding the last
possible date which the Company could have issued such shares of Common Stock to
the Holder without violating Section 1(a). In addition to the foregoing, if
within five (5) trading days after the Company's receipt of the facsimile copy
of an Exercise Notice, the Company shall fail to issue and deliver a certificate
to the Holder and register such shares of Common Stock on the Company's share
register or credit the Holder's balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon such holder's
exercise hereunder, and if on or after such trading day the Holder purchases (in
an open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of shares of Common Stock issuable upon
such exercise that the Holder anticipated receiving from the Company (a
"Buy-In"), then the Company shall, within five (5) business days after the
Holder's written request and in the Holder's discretion, either (i) pay cash to
the Holder in an amount equal to the Holder's total purchase price (including
reasonable brokerage commissions, if any) for the shares of Common Stock so
purchased (the "Buy-In Price"), at which point the Company's obligation to
deliver such certificate (and to issue such shares of Common Stock) shall
terminate, or (ii) promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such shares of Common Stock and pay
cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price
over the product of (A) such number of shares of Common Stock, multiplied by (B)
the Closing Bid Price on the date of exercise.
(d) DISPUTES. In the case of a dispute as to the determination
of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section 15.
(e) LIMITATIONS ON EXERCISE. The Company shall not effect the
exercise of this Warrant, and the Holder shall not have the right to exercise
this Warrant, to the extent that after giving effect to such exercise, such
Person (together with such Person's affiliates) would
4
beneficially own in excess of 9.99% of the shares of Common Stock outstanding
immediately after giving effect to such exercise. For purposes of the foregoing
sentence, the aggregate number of Common Stock beneficially owned by such Person
and its affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which the determination of such
sentence is being made, but shall exclude shares of Common Stock which would be
issuable upon (i) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by such Person and its affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company beneficially owned by such Person and its affiliates (including,
without limitation, any convertible notes or convertible preferred stock or
warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein. Except as set forth in the preceding sentence, for
purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Warrant, in determining the number of outstanding
shares of Common Stock, the Holder may rely on the number of outstanding shares
of Common Stock as reflected in (1) the Company's most recent Form 10-K or 10-Q
and any other Current Report on Form 8-K filed subsequent thereto with the
Securities and Exchange Commission, (2) a more recent public announcement by the
Company or (3) any other notice by the Company or the Transfer Agent setting
forth the number of shares of Common Stock outstanding. For any reason at any
time, upon the written or oral request of the Holder, the Company shall within
one (1) business day confirm orally and in writing to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company by the Holder and its affiliates since
the date as of which such number of outstanding shares of Common Stock was
reported.
(f) FORCE MAJEURE. The Company shall not be liable for or
incur penalties for delays or nonperformance in compliance with the issuance or
delivery of the Warrant Shares upon the exercise of the Warrant, if such delay
or nonperformance was caused by: (i) act of God, act of war, strike, fire,
natural disaster, terrorism, quarantine or accident; or (ii) lack of
availability of materials, fuel or utilities. Under such circumstances, the
provisions of Section 2(c) above shall (x) not apply to such delay or
nonperformance but shall apply once the event(s) that cause such delay or
nonperformance terminates and (y) shall apply to all subsequent exercises of the
Warrant that are not affected by such event(s).
4. TRANSFERABILITY AND EXCHANGE.
(a) TRANSFERABILITY. If this Warrant is to be transferred, the
Holder shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant,
registered as the Holder may request, representing the right to purchase the
number of Warrant Shares being transferred by the Holder and, if less then the
total number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant to the Holder representing the right to purchase the
number of Warrant Shares not being transferred.
(b) EXCHANGE. This Warrant is exchangeable upon its surrender
by the registered Holder to the Company for new Warrants in form and substance
representing in the aggregate the right to purchase the number of shares
purchasable hereunder.
5
(c) LOST, STOLEN OR MUTILATED WARRANT. Upon receipt by the
Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to the Company
in customary form and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver to the
Holder a new Warrant representing the right to purchase the Warrant Shares
then underlying this Warrant.
(d) ISSUANCE OF NEW WARRANTS. Whenever the Company is required
to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated
on the face of such new Warrant, the right to purchase the Warrant Shares then
underlying this Warrant (or in the case of a new Warrant(s) being issued
pursuant to Section 3(a) or Section 3(b), the Warrant Shares designated by the
Holder which, when added to the number of shares of Common Stock underlying the
other new Warrants issued in connection with such issuance, does not exceed the
number of Warrant Shares then underlying this Warrant), (iii) shall have an
issuance date, as indicated on the face of such new Warrant, which is the same
as the issuance date hereunder and (iv) shall have the same rights and
conditions as this Warrant.
(e) SECURITIES LAWS. This Warrant and the Warrant Shares
issuable upon the exercise hereof may not be sold, transferred, pledged or
hypothecated unless the Company shall have been provided with an opinion of
counsel, or other evidence reasonably satisfactory to it, that such transfer is
not in violation of the Securities Act, and any applicable state securities laws
or, with respect to the Warrant Shares, a registration statement has been filed
pursuant to the Securities Act and has been declared effective with respect to
such disposition..
4. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SHARES SUBJECT TO
WARRANt. The Exercise Price and the number of shares of Common Stock purchasable
upon the exercise of this Warrant are subject to adjustment from time to time
upon the occurrence of any of the events specified in this Section 4.
(a) DIVIDENDS, ETC. In case the Company shall, with respect to
the holders of its Common Stock, (i) pay a Common Stock dividend or make a
distribution to its stockholders in shares of Common Stock or other securities,
(ii) split or subdivide its outstanding shares of Common Stock into a greater
number of shares, or (iii) combine its outstanding shares of Common Stock into a
smaller number of shares, then the Exercise Price in effect at the time of the
record date for such dividend or on the effective date of such split,
subdivision or combination, and/or the number and kind of securities issuable on
such date, shall be proportionately adjusted so that the Holder of any Warrant
thereafter exercised shall be entitled to receive the aggregate number and kind
of shares of Common Stock (or such other securities other than Common Stock, as
the case may be) of the Company, at the same aggregate Exercise Price, that, if
such Warrant had been exercised immediately prior to such date, the Holder would
have owned upon such exercise and been entitled to receive by virtue of such
dividend, distribution, split, subdivision or combination. Such adjustment shall
be made successively whenever any event listed above shall occur.
(b) MERGER, ETC. If at any time after the date hereof there
shall be a merger or consolidation of the Company with or into or a transfer of
all or substantially all of the assets of
6
the Company to another entity, then the Holder shall be entitled to receive upon
or after such transfer, merger or consolidation becoming effective, and upon
payment of the Exercise Price then in effect, the number of shares or other
securities or property of the Company or of the successor corporation resulting
from such merger or consolidation, which would have been received by the Holder
for the shares of stock subject to this Warrant had this Warrant been exercised
just prior to such transfer, merger or consolidation becoming effective or to
the applicable record date thereof, as the case may be. The Company will not
merge or consolidate with or into any other corporation, or sell or otherwise
transfer its property, assets and business substantially as an entirety to
another corporation, unless the corporation resulting from such merger or
consolidation (if not the Company), or such transferee corporation, as the case
may be, shall expressly assume in writing the due and punctual performance and
observance of each and every covenant and condition of this Warrant to be
performed and observed by the Company.
(c) RECLASSIFICATION, ETC. If at any time after the date
hereof there shall be a reorganization or reclassification of the securities as
to which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Holder shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Exercise Price then in effect,
the number of shares or other securities or property resulting from such
reorganization or reclassification, which would have been received by the Holder
for the shares of stock subject to this Warrant had this Warrant at such time
been exercised.
(d) ADJUSTMENTS LESS THAN ONE PERCENT. Notwithstanding any
provision herein to the contrary, no adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the Exercise Price; provided, however, that any
adjustments which by reason of this Section 4(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 4 shall be made to the nearest cent or the
nearest one-hundredth of a share, as the case may be.
(e) OTHER CAPITAL STOCK. In the event that at any time, as a
result of an adjustment made pursuant to Section 4(a) or (b) above, the Holder
of this Warrant, when thereafter exercised, shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock,
thereafter the number of such other shares so receivable upon exercise of any
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
shares of Common Stock contained in this Section 4, and the other provisions of
this Warrant shall apply on like terms to any such other shares.
(f) OTHER PROTECTION. In case any event shall occur as to
which the other provisions of this Section 4 are not strictly applicable but the
failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles hereof, then, in each such case, the Company shall effect such
adjustment, on a basis consistent with the essential intent and principles
established in this Section 4, as may be necessary to preserve, without
dilution, the purchase rights represented by this Warrant.
7
5. REGISTRATION RIGHTS. The Holder shall be entitled to the benefits of
the Registration Rights Agreement, dated as of December 14, 2005, among the
Company and each holder of a warrant issued pursuant to an Exercise Agreement
and Indigo Securities, LLC. (A form of such Registration Rights Agreement was
attached as EXHIBIT B to the Exercise Agreement).
6. RESERVATION OF SHARES. The Company agrees at all times to reserve
and hold available out of its authorized but unissued shares of Common Stock the
number of shares of Common Stock issuable upon the full exercise of this
Warrant. The Company further covenants and agrees that all shares of Common
Stock that are delivered upon the exercise of this Warrant will, upon delivery,
be fully paid and nonassessable and free from all taxes, liens and charges with
respect to the purchase thereof hereunder.
7. NOTICES TO HOLDER. Upon any adjustment of the Exercise Price (or
number of shares of Common Stock purchasable upon the exercise of this Warrant)
pursuant to Section 4, the Company shall promptly thereafter, but in no event
later than ten (10) business days after the event causing the adjustment has
occurred, cause to be given to the Holder written notice of such adjustment.
Such notice shall include the Exercise Price (and/or the number of shares of
Common Stock purchasable upon the exercise of this Warrant) after such
adjustment, and shall set forth in reasonable detail the Company's method of
calculation and the facts upon which such calculations were based. Where
appropriate, such notice shall be given in advance and included as a part of any
notice required to be given under the other provisions of this Section 7.
In the event of (a) any fixing by the Company of a record date with
respect to the holders of any class of securities of the Company for the purpose
of determining which of such holders are entitled to dividends or other
distributions, or any rights to subscribe for, purchase or otherwise acquire any
shares of capital stock of any class or any other securities or property, or to
receive any other right or to give effect to any split, (b) any capital
reorganization of the Company, or reclassification or recapitalization of the
capital stock of the Company or any transfer of all or substantially all of the
assets or business of the Company to, or consolidation or merger of the Company
with or into, any other Person, or (c) any voluntary or involuntary dissolution
or winding up of the Company, then and in each such event the Company will give
the Holder a written notice specifying, as the case may be (i) the record date
for such split, dividend, distribution, or right, and stating the amount and
character of such split, dividend, distribution, or right; or (ii) the date on
which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, conveyance, dissolution, liquidation, or winding up is to
take place and the time, if any is to be fixed, as of which the holders of
record of Common Stock (or such capital stock or securities receivable upon the
exercise of this Warrant) shall be entitled to exchange their shares of Common
Stock (or such other stock securities) for securities or other property
deliverable upon such event. Any such notice shall be given at least 10 days
prior to the earliest date therein specified.
8. NO RIGHTS AS A STOCKHOLDER. This Warrant does not entitle the Holder
to any voting rights, distribution rights, dividend rights or other rights as a
stockholder of the Company, nor to any other rights whatsoever except the rights
herein set forth.
8
9. ADDITIONAL COVENANTS OF THE COMPANY. The Company shall, upon
issuance of any shares for which this Warrant is exercisable, at its expense,
promptly obtain and maintain the listing of such shares.
The Company shall comply with the reporting requirements of Sections 13
and 15(d) of the Exchange Act for so long as and to the extent that such
requirements apply to the Company.
The Company shall not, by amendment of its Certificate of Incorporation
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant. Without limiting the generality of the foregoing, the Company (a) will
not increase the par value of any shares of capital stock receivable upon
exercise of this Warrant above the amount payable therefor upon such exercise,
(b) will take all such actions as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable stock,
and (c) the Company shall not, by amendment of its Certificate of Incorporation
or Bylaws or through a reorganization, transfer of assets, consolidation,
merger, dissolution, issuance, or sale of securities or any other voluntary
action, avoid, circumvent, or seek to avoid the observance or performance of any
of the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out of all the provisions of
this Warrant and in taking all such action as may be necessary or appropriate to
protect Holder's rights under this Warrant against impairment.
10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Company, the Holder and their respective successors
and permitted assigns.
11. NOTICES. The Company agrees to maintain a ledger of the ownership
of this Warrant (the "Ledger"). Any notice hereunder shall be given by
registered or certified mail if to the Company, at its principal executive
office and, if to the Holder, to its address shown in the Ledger of the Company;
provided, however, that the Holder may at any time on three (3) business days
written notice to the Company designate or substitute one other address where
notice is to be given. Notice shall be deemed given and received when a
certified or registered letter, properly addressed with postage prepaid, is
deposited in the U.S. mail.
12. SEVERABILITY. Every provision of this Warrant is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the remainder of this
Warrant.
13. GOVERNING LAW AND CHOICE FORUM. This Warrant shall be governed by
and construed in accordance with the laws of the State of New York without
giving effect to its principles of choice of laws thereof. Any action or
proceeding arising out of or relating to this Warrant must be instituted in the
Federal or State courts sitting in New York County.
14. ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Warrant, the prevailing party shall be entitled to recover
reasonable attorneys' fees in addition to its costs and expenses and any other
available remedy.
15. DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares, the Company shall submit the
9
disputed determinations or arithmetic calculations via facsimile within one (1)
business day of receipt of the Exercise Notice giving rise to such dispute, as
the case may be, to the Holder. If the Holder and the Company are unable to
agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within two (2) business days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within two (2) business days thereafter submit via facsimile (a) the disputed
determination of the Exercise Price to an independent, reputable investment bank
selected by the Company and approved by the Holder (such approval not to be
unreasonably withheld, delayed or conditioned) or (b) the disputed arithmetic
calculation of the Warrant Shares to the Company's independent, outside
accountant. The Company shall cause the investment bank or the accountant, as
the case may be, to perform the determinations or calculations and notify the
Company and the Holder of the results no later than ten (10) business days from
the time it receives the disputed determinations or calculations. Such
investment bank's or accountant's determination or calculation, as the case may
be, shall be binding upon all parties absent demonstrable error. The fees of
such investment bank or independent accountant shall be borne one half by the
Company and one half by the Holder.
16. REMEDIES. The remedies provided in this Warrant shall be cumulative
and in addition to all other remedies available under this Warrant, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), and nothing herein shall limit the right of the Holder to pursue actual
damages for any failure by the Company to comply with the terms of this Warrant.
17. AMENDMENT AND WAIVER. Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder; provided
that no such action may increase the exercise price of this Warrant or decrease
the number of shares or class of stock obtainable upon exercise of this Warrant
without the written consent of the Holder.
18. TRANSFER. This Warrant may be offered for sale, sold, transferred
or assigned without the consent of the Company, except as may otherwise be
restricted by applicable federal and state securities laws.
19. ENTIRE AGREEMENT. This Warrant (including the Exhibits attached
hereto) constitutes the entire understanding between the Company and the Holder
with respect to the subject matter hereof, and supersedes all prior
negotiations, discussions, agreements and understandings relating to such
subject matter.
20. CERTAIN DEFINITIONS. For purposes of this Warrant, the following
terms shall have the following meanings:
(a) "Bloomberg" means Bloomberg Financial Markets.
(b) "Closing Bid Price" and "Closing Sale Price" means, for
any security as of any date, the last closing bid price and last closing trade
price, respectively, for such security on the American Stock Exchange, as
reported by Bloomberg, or, if the American Stock Exchange
10
begins to operate on an extended hours basis and does not designate the closing
bid price or the closing trade price, as the case may be, then the last bid
price or last trade price, respectively, of such security prior to 4:00:00 p.m.,
New York Time, as reported by Bloomberg, or, if the American Stock Exchange is
not the principal securities exchange or trading market for such security, the
last closing bid price or last trade price, respectively, of such security on
the principal securities exchange or trading market where such security is
listed or traded as reported by Bloomberg, or if the foregoing do not apply, the
last closing bid price or last trade price, respectively, of such security in
the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the average of the bid
prices, or the ask prices, respectively, of any market makers for such security
as reported in the "pink sheets" by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price
cannot be calculated for a security on a particular date on any of the foregoing
bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of
such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved
pursuant to Section 15.
(c) "Person" means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.
(d) "VWAP" means, with respect to any shares of stock or
securities, including the Common Stock (as defined below), on any date of
determination, the dollar volume-weighted average price per share for the thirty
(30) consecutive Trading Days preceding and including such date of determination
as reported by Bloomberg, through its "Volume at Price" functions or, if the
foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30 a.m., New York City Time, on
the first Trading Day of the applicable thirty (30) consecutive trading period
described above and ending at 4:00 p.m., New York City Time, on the last trading
day of the applicable thirty (30) consecutive trading day period described
above, as reported by Bloomberg.
11
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of the date first set forth above.
Elite Pharmaceuticals, Inc.
By:
----------------------------------------
Name: Bernard Berk
Title: Chief Executive Officer
12
EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
ELITE PHARMACEUTICALS, INC.
The undersigned registered holder (the "Registered Holder") of the
attached Warrant to Purchase Common Stock (the "WARRANT") hereby exercises the
right to purchase shares of Common Stock ("WARRANT SHARES") of Elite
Pharmaceuticals, a Delaware corporation (the "COMPANY"), as set forth below.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
1. SHARES EXERCISED. The Registered Holder hereby exercises the
Warrant with respect to _________________ Warrant Shares;
2. PAYMENT OF EXERCISE PRICE. The Registered Holder shall pay the
Aggregate Exercise Price in the sum of $___________________ to
the Company in accordance with the terms of the Warrant.
3. DELIVERY OF WARRANT SHARES. The Company shall deliver to the
Registered Holder __________ Warrant Shares in accordance with
the terms of the Warrant.
The Registered Holder understands that if the Common Stock has not been
registered under the Securities Act, the Registered Holder must hold such Common
Stock indefinitely unless the Common Stock is subsequently registered and
qualified under the Securities Act or is exempt from such registration and
qualification. The Registered Holder shall not make any transfer or disposition
of the Common Stock unless (a) in the opinion of counsel reasonably satisfactory
to the Company such transfer or disposition can be made without registration
under the Securities Act by reason of a specific exemption from such
registration and such qualification or (b) a registration statement has been
filed pursuant to the Securities Act and has been declared effective with
respect to such disposition.
Date: ,
---------------------- -------- ------------
- --------------------------------------------------
Name of Registered Holder
By:
--------------------------------------------
Title (if applicable):
13
ASSIGNMENT FORM
(To assign the foregoing warrant, execute this form and supply required
information. Do not use this form to exercise the warrant.)
For Value Received the foregoing Warrant and all rights evidenced
thereby are hereby assigned to __________________________ whose address is
___________________________________________, ________________________________
Dated:
----------------------------, --------------
Holder's Signature:
--------------------------------
Holder's Address: ---------------------------------
---------------------------------
14