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Exhibit 10.2
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HYBRIDON, INC.
AND
FORUM CAPITAL MARKETS L.P.
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INITIAL PURCHASER'S
WARRANT AGREEMENT
Dated as of March 26, 1997
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INITIAL PURCHASER'S WARRANT AGREEMENT, dated as of March 26, 1997 by and
between HYBRIDON, INC., a Delaware corporation (the "Company"), and FORUM
CAPITAL MARKETS L.P. (the "Initial Purchaser").
W I T N E S S E T H:
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WHEREAS, the Company proposes to issue to the Initial Purchaser warrants
("Warrants") to purchase up to 427,807 shares of Common Stock, par value $.001
per share, of the Company (the "Common Stock"); and
WHEREAS, the Initial Purchaser has agreed, pursuant to the purchase
agreement dated March 26, 1997 between the Initial Purchaser and the Company
(the "Purchase Agreement"), to act as the Initial Purchaser in connection with
the Company's proposed offering (the "Offering") of up to $60,000,000 aggregate
principal amount of 9% Convertible Subordinated Notes due 2004 (the "Notes");
and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Purchase Agreement)
by the Company to the Initial Purchaser in consideration for, and as part of the
Initial Purchaser's compensation in connection with, the Initial Purchaser
acting as such pursuant to the Purchase Agreement;
NOW, THEREFORE, in consideration of the premises hereof, the payment by the
Initial Purchaser to the Company of an aggregate of $42.78, the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Grant.
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(a) The Initial Purchaser is hereby granted the right pursuant to the
Warrants to purchase, at any time from April 2, 1998 until 5:30 p.m., New York
time, on April 2, 2002 (the "Expiration Date"), up to 427,807 shares of Common
Stock (subject to adjustment as provided in Section 8 hereof and cancellation
pursuant to Sections 1(b) and 1(c) hereof) at an exercise price (subject to
adjustment as provided in Section 8 hereof), of $7.0125 per share subject to the
terms and conditions of this Agreement. Any Warrant that is not exercised on or
prior to the Expiration Date shall be void, and all rights hereunder shall
cease.
(b) Notwithstanding the provisions of Section 1(a) hereof, the Company
shall hold in escrow Warrant Certificates (as defined below) with respect to
Warrants to purchase up to 71,301 shares of Common Stock, which Warrant
Certificates shall be released to the Initial Purchaser at each Option Closing
(as such term is defined in the Purchase Agreement), if any. At each Option
Closing there shall be released to the Initial Purchaser Warrant Certificates
representing that portion of such Warrants equivalent to the ratio which the
aggregate principal amount of Notes purchased at such Option Closing bears to
$10,000,000. Any Warrants held in escrow on June 9, 1997 pursuant to this
Section 1(b) shall be cancelled and terminated.
(c) Notwithstanding the provisions of Section 1(a) hereof, if during the
effectiveness of a registration statement filed pursuant to Section 7.2(a)
hereof any Warrant Securities are sold under such registration statement, then,
within 10 days after learning of such sale, the Company will give notice of such
sale to each Holder of then outstanding Warrants. If such notice is given, all
Warrants outstanding on the date such registration statement is terminated or
withdrawn in accordance with Section 7.3 hereof shall be cancelled and
terminated on such date.
2. WARRANT CERTIFICATES. The warrant certificates delivered and to be
delivered pursuant to this Agreement (the "Warrant Certificates") shall be in
the form set forth in Exhibit A attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions and other variations as
required or permitted by this Agreement. Notwithstanding the foregoing, in the
event that any provision of the Warrant Certificates conflicts with or are
inconsistent with the terms of this Agreement, the terms of this Agreement shall
supersede the provisions in the Warrant Certificates.
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3. EXERCISE OF WARRANT. The Warrants initially are exercisable at an
initial exercise price per share of Common Stock set forth in Section 6 hereof
(subject to adjustment as provided in Section 8 hereof) payable by certified or
official bank check. Upon surrender of a Warrant Certificate with a duly
executed Election to Purchase (in the form of Annex A to the Warrant
Certificate) together with payment of the Exercise Price (as hereinafter
defined) for the Common Stock purchased at the Company's principal offices
(presently located at 620 Memorial Drive, Cambridge, Massachusetts 02139), the
registered holder of a Warrant Certificate ("Holder") shall be entitled to
receive a certificate or certificates for the Common Stock so purchased. The
purchase rights represented by each Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but not as to fractional
shares of Common Stock underlying the Warrants). In the case of the purchase of
less than all the Common Stock purchasable under any Warrant Certificate, the
Company shall cancel said Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate of like tenor for the
balance of the Common Stock purchasable thereunder.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of the Warrants, the
issuance of certificates for the total number of whole shares of Common Stock
for which such Warrants were exercised shall be made forthwith (and in any event
within five business days thereafter) without charge to the Holder thereof
including, without limitation, any stock transfer or similar tax which may be
payable in respect of the issuance thereof, and such certificates shall (subject
to the provisions of Sections 5 and 7 hereof) be issued in the name of, or in
such names as may be directed by, the Holder thereof; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the Holder, and the Company shall not be required
to issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
The Warrant Certificates shall be executed on behalf of the Company, by the
manual or facsimile signature of the then present Chairman or Vice Chairman of
the Board of Directors or President or Vice President of the Company under its
corporate seal reproduced thereon and by the manual or facsimile signature of
the then present Treasurer or Assistant Treasurer or Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer. Certificates representing the Common Stock issuable upon exercise
of the Warrants (and/or other securities, property or rights issuable upon
exercise of Warrants) shall be dated the date on which the Company receives the
Election to Purchase, Warrant Certificate and payment of the Exercise Price
(regardless of when executed).
5. RESTRICTION ON TRANSFER OF WARRANTS. The Holder of a Warrant
Certificate, by acceptance thereof, covenants and agrees that (a) the Warrants
represented by such Warrant Certificate and the shares of Common Stock issuable
upon exercise of such Warrants (the "Warrant Securities") are being acquired as
an investment and not with a view to, nor for sale in connection with, the
distribution thereof; nor with any present intention of distributing or selling
the same, except as may be permitted under applicable securities laws. The
Warrants and the Warrant Shares have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), or any state securities law and
any transfer of the Warrants and the Warrant Shares may only be made upon such
registration or pursuant to an exemption from registration thereunder and, if
required by the Company in connection with any transfer pursuant to such an
exemption from registration, conditioned upon receipt by the Company of an
opinion of counsel, reasonably satisfactory to counsel to the issuer, that such
an exemption is available for such transfer. Upon exercise, in part or in whole,
of the Warrants, certificates representing the Common Stock issuable upon
exercise of the Warrants (and/or other securities, property or rights issuable
upon exercise of Warrants) shall bear the following legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered or sold except pursuant to (i) an effective registration
statement under the Securities Act or (ii) an exemption from registration
under the Securities Act, of an opinion of counsel, reasonably satisfactory
to counsel to the issuer, is delivered that such an exemption is available
for such transfer.
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Any assignment shall be effected by a duly executed assignment in the form of
Annex B to the Warrant Certificate and shall be subject to the provisions of
this Section 5 and Section 9 hereof.
6. EXERCISE PRICE. The initial exercise price of each Warrant shall be
$7.0125 per share of Common Stock. The adjusted exercise price of each Warrant
shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the provisions of
Section 8 hereof. The term "Exercise Price" herein shall mean the initial
exercise price or, after the first adjustment hereunder, the adjusted exercise
price.
7. Registration Rights.
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7.1 PIGGYBACK REGISTRATION. The Company shall use its reasonable best
efforts to include the Common Stock issued or issuable upon exercise of the
Warrants (the "Warrant Securities") in the shelf registration statement (the
"Shelf Registration Statement") to be filed under the Securities Act pursuant to
the Registration Rights Agreement between the Company and the Initial Purchaser
dated concurrently herewith. If, at any time commencing after the date on which
the Shelf Registration Statement is terminated or withdrawn and expiring seven
years after the date hereof, the Company proposes to register any of its
securities under the Securities Act (other than pursuant to Form S-4, Form S-8
or any successor form of limited purpose and other than any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation), it will give written notice by
registered mail, at least 20 days prior to the filing of each such registration
statement, to the Holders of the Warrants or Warrant Securities of its intention
to do so. If the Holders of the Warrants and/or Warrant Securities notify the
Company within 20 days after receipt of any such notice of its or their desire
to include any of their respective Warrant Securities in such proposed
registration statement, the Company shall afford each of such Holders the
opportunity to have such Warrant Securities registered under such registration
statement. In connection with any offering under this Section 7.1 involving a
firm commitment underwriting of Common Stock, the Company shall not be required
to include any Warrant Securities in such underwriting unless the Holders
thereof accept the terms of the underwriting agreement related thereto as agreed
upon between the Company and/or the holders of securities of the Company who
have initiated such offering pursuant to demand registration rights held by them
and the underwriter(s) of such offering. If such offering is an underwritten
offering and in the opinion of the managing underwriter(s) of such offering the
registration of all, or part of, shares of Common Stock ("Incidental Shares")
which the Holders have requested to be included pursuant to this Section 7.1
and/or which other holders of shares of Common Stock or other securities of the
Company entitled to include shares of Common Stock in such registration (other
than, if such registration is initiated by the demand of holders of specified
securities of the Company, for securities of such holders ("Initiating
Stockholders"), have requested to be included would materially and adversely
affect such public offering, then the Company shall be required to include in
the underwriting only that number of such shares, if any, which the managing
underwriter(s) believe(s) may be sold without causing such adverse effect. If
the number of Warrant Securities to be included in the underwriting in
accordance with the foregoing is less than the total number of shares which the
Holders have requested be included, then (i) the party or parties initiating the
registration (i.e., the Company or the Initiating Stockholders) shall be
entitled to include all shares that they have requested to be registered and
(ii) the Holders who have requested registration and other holders of shares of
Common Stock or other securities of the Company entitled to include shares of
Common Stock in such registration on a parity with the Holders (i.e., all
holders of such securities other than the Initiating Stockholders, who shall be
entitled to include the total number of shares they have requested as provided
in clause (i), or those persons who have registration rights expressly
subordinated to the Holders) shall participate in the underwriting pro rata
based upon their total ownership of shares of Common Stock of the Company.
Notwithstanding the provisions of this Section 7.1, the Company shall have
the right at any time after it shall have given written notice pursuant to this
Section 7.1 (irrespective of whether a written request for inclusion of any such
Warrant Securities shall have been made) to elect not to file any such proposed
registration statement or to withdraw the same after the filing but prior to the
effective date thereof.
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7.2 Demand Registration.
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(a) At any time commencing on the date the Shelf Registration Statement is
terminated or withdrawn and expiring seven years after the date hereof, the
Holders of the Warrants and/or Warrant Securities representing a Majority (as
hereinafter defined) of such securities shall have the right (which right is in
addition to the registration rights under Section 7.1 hereof), exercisable by
written notice to the Company, to require the Company to use its best efforts to
prepare and file with the Securities and Exchange Commission (the "Commission"),
on one occasion only, a registration statement on such form selected by the
Company as it is then eligible to use and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel for the Company
and counsel for the Holders, in order to comply with the provisions of the
Securities Act, so as to permit a public offering and sale of their Warrant
Securities for six consecutive months (subject to the provisions of Section
7.2(d) below) by any such Holders and any other Holders of the Warrants and/or
Warrant Securities who notify the Company of their decision to join therein
within 10 days after receiving notice from the Company pursuant to Section
7.2(b) below.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.2 to all Holders of the Warrants
and/or the Warrant Securities within 10 days from the date of the receipt of any
such registration request.
(c) [Intentionally omitted]
(d) Notwithstanding the provisions of Sections 7.2(a) and (c), if at any
time during which the Company is obligated to maintain the effectiveness of a
registration statement pursuant to such Sections counsel to the Company (which
counsel shall be experienced in securities matters) has determined in good faith
it is reasonable to conclude that the filing of such registration statement or
the compliance by the Company with its disclosure obligations thereunder may
require the disclosure of material information which the Board of Directors of
the Company has identified as material and which the Board of Directors has
determined the Company has a bona fide business purpose for preserving as
confidential, then the Company may delay the filing or the effectiveness of such
registration statement (if not then filed or effective, as appropriate) and
shall not be required to maintain the effectiveness thereof or amend or
supplement the registration statement for a period expiring three business days
after the earlier to occur of (i) the date on which such information is
disclosed to the public or ceases to be material or the Company is so able to
comply with its disclosure obligations or (ii) 45 days after the Company
notifies the Holders of such good faith determination. There shall not be more
than two such delay periods with respect to any registration pursuant to Section
7.2(a), and the period such registration statement is required to be kept
effective by the Company shall be increased by the period of any such delay
period. Notice of any such delay period and of the termination thereof will be
promptly delivered by the Company to each Holder and shall be maintained in
confidence by each such Holder.
7.3 COVENANTS WITH RESPECT TO REGISTRATION. In connection with any
registration under Section 7.1 or 7.2 hereof, as applicable, the Company
covenants and agrees as follows:
(a) In connection with any registration under Section 7.2, the Company
shall use its best efforts to file a registration statement as soon as
practicable, but in any event within 90 days after receipt of any demand
therefor, shall use its best efforts to have such registration statement
declared effective at the earliest possible time and shall furnish each Holder
desiring to sell Warrant Securities such number of prospectuses as shall
reasonably be requested; provided, however, that the Company shall not be
obligated to effect such registration under the Securities Act except in
accordance with the following provisions:
(i) the Company shall not be obligated to use its best efforts to file
and cause to become effective any registration statement for a period of up
to 90 days if at the time of such request any other registration statement
pursuant to which shares of Common Stock of the Company are to be or were
sold has been filed with the Commission and not withdrawn or has been
declared effective within the prior 60 days; and
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(ii) the Company may delay the filing or effectiveness of the
registration statement for a period of up to 90 days after the date of a
request for registration if at the time of such request the Company is
engaged in a firm commitment underwritten public offering of Common Stock
in which the Holders may include their Warrant Securities pursuant to
Section 7.1 hereof.
(b) The Company shall pay all costs, fees and expenses in connection with
all registration statements filed pursuant to Sections 7.1 and 7.2(a) hereof
(excluding fees and expenses of Holders' counsel and any underwriting or selling
commissions), including, without limitation, the Company's legal and accounting
fees, printing expenses and blue sky fees and expenses. If the Company shall
fail to comply with the provisions of Section 7.3(a) hereof, the Company shall,
in addition to any other equitable or other relief available to such Holders,
extend the Exercise Period by such number of days as shall equal the delay
caused by the Company's failure and be liable for any or all incidental, special
and consequential damages sustained by such Holders.
(c) The Company shall furnish to each Holder, promptly after filing thereof
with the Commission, a copy of the registration statement filed pursuant to
Section 7.1 or 7.2 (a "Registration Statement") and each amendment thereto or
each amendment or supplement to the prospectus included therein (the
"Prospectus").
(d) The Company shall take such action as may be reasonably necessary so
that (i) the Registration Statement and any amendment thereto and any Prospectus
forming a part thereof and any supplement or amendment thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) the Registration Statement and any amendment thereto (in either
case, other than with respect to written information furnished to the Company by
or on behalf of any Holder specifically for inclusion therein) does not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make any statement therein not misleading
and (iii) the Prospectus and any supplement thereto (in either case, other than
with respect to such information from Holders), does not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(e) The Company shall promptly advise the Holders of Warrant Securities
registered under the Registration Statement (which advice pursuant to clauses
(ii) - (iv) shall be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made) and, if requested by such
persons, shall confirm such advice in writing:
(i) when the Registration Statement and any amendment thereto has been
filed with the Commission and when the Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of the suspension by any
state securities commission of the qualification of the Warrant Securities
for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes; and
(iv) of the happening of any event that requires the making of any
changes in the Registration Statement or the Prospectus so that, as of such
date, the Registration Statement and the Prospectus do not contain an
untrue statement of a material fact and do not omit to state a material
fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances under
which they were made) not misleading.
(f) If at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities commission
or other regulatory authority shall issue an order
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suspending the qualification or exemption from qualification of the Warrant
Securities under state securities or Blue Sky laws, the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(g) The Company shall furnish to each Holder of Warrant Securities included
under the Registration Statement, without charge, at least one copy of the
Registration Statement and each post-effective amendment thereto, including all
financial statements and schedules, documents incorporated by reference therein
and, if the Holder so requests in writing, all exhibits (including exhibits
incorporated therein by reference).
(h) The Company shall, during the period the Company is obligated to
maintain the effectiveness of a Registration Statement under Section 7.2 hereof,
deliver to each Holder of Warrant Securities included under the Registration
Statement, without charge, such reasonable number of copies of the Prospectus
(including each preliminary prospectus) included in the Registration Statement
and any amendment or supplement thereto as such Holder may reasonably request to
facilitate the public sale or other disposition of the Warrant Securities by the
selling Holder.
(i) Prior to any public offering pursuant to the Registration Statement,
the Company shall use its reasonable best efforts to register or qualify or
cooperate with the Holders of Warrant Securities registered thereunder, the
underwriter(s), if any, and their respective counsel in connection with the
registration and qualification of such Warrant Securities under the securities
or Blue Sky laws of such jurisdictions as such Holders or underwriters
reasonably request in writing and do any and all other acts or things reasonably
necessary or advisable to enable the offer and sale in such jurisdictions of
such Warrant Securities; provided, however, that the Company will not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process or to taxation in any jurisdiction where it is not then so subject.
(j) The Company shall cooperate with the Holders and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Warrant Securities to be sold under the Registration Statement,
free of any restrictive legends and in such denominations and registered in such
names as the Holders or the underwriter(s), if any, may reasonably request in
connection with the sales of Warrant Securities pursuant to the Registration
Statement.
(k) Upon the occurrence of any event contemplated by Section 7(e)(ii) -
(iv) hereof, the Company shall file (and use its reasonable best efforts to have
declared effective as soon as possible) a post-effective amendment to the
Registration Statement or an amendment or supplement to the Prospectus or file
any other required document so that, as thereafter delivered to the purchasers
of Warrant Securities registered under the Registration Statement, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein in light of the
circumstances under which they were made not misleading. Each Holder of Warrant
Securities registered under the Registration Statement agrees by acquisition of
such Warrant Securities that, upon receipt of any notice from the Company of the
existence of any fact of the kind described in Section 7(e)(ii) - (iv) hereof,
such Holder will forthwith discontinue disposition of Warrant Securities
pursuant to the Registration Statement until such Holder receives copies of the
supplemented or amended Prospectus contemplated by this Section 7(k), or until
such Holder is advised in writing by the Company that the use of the Prospectus
may be resumed, and such Holder has received copies of any additional or
supplemental filings which are incorporated by reference in the Prospectus. If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Warrant Securities current
at the time of receipt of such notice.
(l) The Company shall use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make generally available
to its security holders or otherwise provide in accordance with Section 11(a) of
the Act, as soon as practicable after the effective date of the Registration
Statement an earnings statement satisfying the provisions of Section 11(a) of
the Act.
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(m) The Company may require each Holder of Warrant Securities to be
registered under the Registration Statement to furnish to the Company such
information regarding such Holder and the distribution of such Holder's
securities thereunder as the Company may from time to time reasonably require
for inclusion in the Registration Statement and the Company may exclude from
such registration the Warrant Securities of any Holder that fails to furnish
such information within a reasonable time after receiving such request.
(n) With respect an offering pursuant to Section 7.2 only, the Company
shall, if requested by the Holders of Warrant Securities being sold in an
underwritten offering or the underwriter(s) thereof, promptly incorporate in the
Registration Statement or Prospectus, pursuant to a supplement or post-effective
amendment, if necessary, such information relating to the plan of distribution
of the Warrant Securities, information with respect to the principal amount of
Warrant Securities being sold to such underwriter(s), the purchase price being
paid therefor and with respect to any other terms of the offering of the Warrant
Securities to be sold in such offering as such underwriters and Holders
reasonably agree should be included therein and to which the Company does not
reasonably object; and shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the Company
is notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment. Notwithstanding the foregoing, any delay period
resulting from such supplement or amendment shall not constitute a delay period
under Section 7.2(d) hereof.
(o) With respect an offering pursuant to Section 7.2 only, the Company
shall enter into such customary agreements (including an underwriting agreement
in customary form, if applicable) and take all such other reasonable and
appropriate actions in order to expedite or facilitate the disposition of the
Warrant Securities in an underwritten offering pursuant to the Registration
Statement, and in connection therewith, the Company shall (1) make such
representations and warranties to the underwriter(s), if any, in form, substance
and scope as are customarily made by issuers to underwriters in comparable
underwritten offerings; (2) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to such underwriters) addressed to each such
underwriter covering such matters as are customarily covered in opinions
requested in underwritten offerings; (3) if and to the extent permitted by
Statement of Auditing Standards No. 72, obtain comfort letters and updates
thereof from the Company's independent certified public accountants addressed to
the underwriters requesting the same, such letters to be in customary form and
covering matters of the type customarily covered in comfort letters in
connection with primary underwritten offerings; (4) set forth in full or
incorporate by reference in the underwriting agreement the indemnification
provisions and procedures of Section 6 hereof with respect to all parties to be
indemnified pursuant to said Section; and (5) deliver such documents and
certificates as may be reasonably requested by such underwriters to evidence
compliance with Section 5(i) and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company pursuant
to this Section 7(o). The foregoing actions set forth in clauses (1), (2), (3)
and (5) of this Section 5(o) shall be performed at each closing under any
underwriting or similar agreement as and to the extent required thereunder.
(p) With respect an offering pursuant to Section 7.2 only, the Company
shall make available at reasonable times for inspection by the Holders of the
Warrant Securities, any underwriter participating in any disposition pursuant to
the Registration Statement, and any attorney or accountant retained by any such
Holders or underwriters, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries; and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such Holder, underwriter, attorney or accountant in connection
with the Registration Statement subsequent to the filing thereof as is customary
for similar due diligence examinations; provided, however, that any information
that is designated in writing by the Company, in good faith, as confidential at
the time of delivery of such information shall be kept confidential by such
Holders or any such underwriter, attorney or accountant, unless (i) such
disclosure is required to be in connection with a court proceeding or required
by law (provided that the disclosing party provides prior written notice to the
Company and cooperates with the Company, at the Company's expense, to take
reasonable and lawful actions to avoid and/or minimize the extent of such
disclosure) or (ii) such information becomes available to the public other than
through a wrongful act by such Person; and provided, further that the foregoing
inspection and information gathering shall, to the greatest extent possible, be
coordinated on behalf of the Holders and the other parties entitled thereto by
one counsel designated by and on behalf of such Holders and other parties.
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(q) The Company shall use its reasonable best efforts, subject to any
applicable rules thereto, to cause all Common Stock included among the Warrant
Securities to be listed on each securities exchange on which the Common Stock is
listed.
(r) Nothing contained in this Agreement shall be construed as requiring the
Holders to exercise their Warrants prior to the initial filing of any
Registration Statement or the effectiveness thereof; provided, however, no
Holder of Warrants with respect to which the underlying Warrant Securities are
registered under an effective registration statement filed pursuant to Section
7.2 hereof may exercise such Holder's Warrants in part instead of in whole.
(s) The Company may permit the inclusion of any securities other than
Warrant Securities to be included in any Registration Statement filed pursuant
to Section 7.2(a) hereof provided that viz. a viz. the Holders, the holders of
such other securities shall have no greater right to include their shares in
such registration statement than Holders have to include their shares in an
offering by Initiating Stockholders pursuant to Section 7.1 hereof and provided
further that, viz. a viz. such other holders, the Holders have rights no less
than Initiating Stockholders have in relation to the Holders to include all of
their shares in such a registration statement pursuant to Section 7.1 hereof.
(t) For purposes of this Agreement, the term "Majority" in reference to the
Holders of Warrants and/or Warrant Securities shall mean the Holders of Warrants
and/or Warrant Securities who, assuming the immediate exercise of all of the
outstanding Warrants for Common Stock, would hold in excess of fifty percent
(50%) of the Common Stock then issued or issuable pursuant to Warrants that (i)
are not held by the Company, an affiliate or officer thereof or any of their
respective affiliates, members of their family or persons acting as their
nominees or in conjunction therewith or (ii) have not been resold to the public
pursuant to a Registration Statement filed with the Commission under the
Securities Act.
(u) Indemnification and Contribution.
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(1) The Company agrees to indemnify and hold harmless each Holder (for
purposes of this Section 7(u), "Holder" shall include the officers, directors,
partners, employees and agents, and each person, if any, who controls any Holder
("controlling person") within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, from and against any and all losses, claims,
damages, expenses or liabilities, joint or several (and actions, proceedings,
suits and litigation in respect thereof), whatsoever, as the same are incurred,
to which such Holder or any such controlling person may become subject, under
the Securities Act, the Exchange Act or any other statute or at common law or
otherwise insofar as such losses, claims, damages, expenses or liabilities arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or any preliminary
Prospectus or Prospectus (as from time to time amended and supplemented) or
arise out of or are based upon the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein (with respect to any preliminary Prospectus or Prospectus, in the light
of the circumstances under which they were made), not misleading; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, expense or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, or any preliminary
Prospectus or Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any such Holder specifically for inclusion therein and provided,
further, that the Company shall not be liable to any such Holder under the
indemnity agreement in this subsection (1) (i) with respect to any preliminary
Prospectus or Prospectus (if such Prospectus has then been amended or
supplemented) to the extent that any such loss, liability, claim, damage or
expense of such Holder arises out of a sale of Warrant Securities by such Holder
to a person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (or of the Prospectus as
then amended or supplemented) if the Company has previously furnished copies
thereof to such Holder a reasonable time in advance and the loss, liability,
claim, damage or expense of such Holder results from an untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in the preliminary Prospectus (or the Prospectus) which was corrected
in the Prospectus (or the Prospectus as amended or supplemented) or (ii) to the
extent that any such loss, claim, damage, expense or liability arises out of
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or is based upon any action or failure to act by such Holder that is found in a
final judicial determination (or a settlement tantamount thereto) to constitute
bad faith, willful misconduct or gross negligence on the part of such Holder.
The indemnity agreement in this subsection (1) shall be in addition to any
liability which the Company may have at common law or otherwise.
The Company also agrees to indemnify or contribute to losses of, as
provided in Section 7(u)(4), any underwriters of Warrant Securities registered
under the Registration Statement, their officers and directors and each person,
if any, who controls any such underwriter (within the meaning of the Act) on
substantially the same basis as that of the indemnification of the Holders
provided in this Section 7(u)(1) and shall, if requested by any Holder, enter
into an underwriting agreement reflecting such agreement, as provided in Section
7(o) hereof.
(2) Each Holder agrees to indemnify and hold harmless the Company, each of
its directors, each of its officers and each other person, if any, who controls
the Company within the meaning of the Securities Act, to the same extent as the
foregoing indemnity from the Company to the Holders, but only with respect to
statements or omissions, if any, made in conformity with information relating to
such Holder furnished in writing by such Holder specifically for use in the
Registration Statement in the Registration Statement, or any preliminary
Prospectus or the Prospectus or any amendment thereof or supplement thereto;
provided, however, that the obligation to indemnify will be individual to each
Holder and will be limited to the amount of net proceeds received by such Holder
from the sale of Warrant Securities pursuant to the Registration Statement.
(3) Promptly after receipt by an indemnified party under this Section 7(u)
of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 7(u), notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under Sections 7(u)(1) or (2) unless and to the
extent that it has been prejudiced in a material respect by such failure or from
the forfeiture of substantial rights and defenses). In case any such action,
suit or proceeding is brought against any indemnified party, and it notifies an
indemnifying party or parties of the commencement thereof, the indemnifying
party or parties will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party,
which may be the same counsel as counsel to the indemnifying party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action at the expense of the indemnifying party, (ii) the indemnifying parties
shall not have employed counsel reasonably satisfactory to such indemnified
party to take charge of the defense of such action within a reasonable time
after notice of commencement of the action or (iii) such indemnified party or
parties shall have reasonably concluded, after consultation with counsel to such
indemnified party or parties, that a conflict of interest exists which makes
representation by counsel chosen by the indemnifying party not advisable (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel shall be borne by
the indemnifying parties. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
Anything in this Section 7 to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent.
(4) In order to provide for just and equitable contribution in any case in
which (i) an indemnified party makes claim for indemnification pursuant to this
Section 7(u), but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that the express
provisions of this Section 7(u) provide for indemnification in such case, or
(ii) contribution under the Securities Act may be required, then each
indemnifying party, in lieu of indemnifying such indemnified
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party, shall contribute to the amount paid as a result of such losses, claims,
damages, expenses or liabilities (or actions, suits, proceedings or litigation
in respect thereof) in such proportion as is appropriate to reflect the relative
fault of each of the contributing parties, on the one hand, and the party to be
indemnified, on the other hand, in connection with the statements or omissions
that resulted in such losses, claims, damages, expenses or liabilities, as well
as any other relevant equitable considerations. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by a Holder,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, expenses or liabilities (or actions, suits, proceedings or litigation
in respect thereof) referred to above in this subsection (4) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating, preparing or defending any such action,
claim, suit, proceeding or litigation. Notwithstanding the provisions of this
subsection (4), no Holder shall be required to contribute any amount in excess
of the amount by which the total price at which the Warrant Securities sold by
such indemnifying party and distributed to the public were offered to the public
exceeds the amount of any damages that such indemnifying party has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 12(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls the Company within the meaning of the Securities Act, each executive
officer of the Company and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to this subsection
(4). Any party entitled to contribution will, promptly after receipt of notice
of commencement of any action, suit, proceeding or litigation against such party
in respect to which a claim for contribution may be made against another party
or parties under this subsection (4), notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have hereunder or otherwise than under this
subsection (4), or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may have at common
law or otherwise.
(v) Notwithstanding the foregoing provisions of this Section 7.3, no
registration rights shall be extended pursuant to this Section 7 with respect to
any Warrant Securities (i) which have been sold pursuant to and in accordance
with an effective Registration Statement, (ii) sold in accordance with Rule 144
under the Securities Act or (iii) eligible for sale under Rule 144(k) under the
Securities Act.
8. Adjustments to Exercise Price and Number of Securities.
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8.1 Adjustments.
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(a) In the event that the Company shall subdivide its outstanding shares of
Common Stock into a greater number of shares or combine its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior thereto shall be forthwith proportionately decreased in the
case of a subdivision or increased in the case of a combination. An adjustment
made pursuant to this Section 8.1(a) shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately after the date
of such subdivision or combination, as the case may be.
(b) In the event that the Company shall (i) issue or distribute (for no
consideration or at a price per share less than the Current Market Price (as
defined below) per share on the date of such issuance or distribution shares of
any class of capital stock of the Company (such shares being hereafter referred
to as "Capital Stock") generally to holders of Common Stock or to holders of any
class or series of Capital Stock which is convertible into or exchangeable or
exercisable for Common Stock (excluding an issuance or distribution of Common
Stock described in Section 8.1(a)) or (ii) issue or distribute generally to
such holders rights, warrants, options or convertible or exchangeable securities
entitling the holder thereof to subscribe for, purchase, convert into or
exchange for Capital Stock at a price per share less than the Current Market
Price per share of such Capital Stock
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on the date of such issuance or distribution, then, in each such case, at the
earliest of (A) the date the Company enters into a firm contract for such
issuance or distribution, (B) the record date for the determination of
stockholders entitled to receive any such Capital Stock or any such rights,
warrants, options or convertible or exchangeable securities or (C) the date of
actual issuance or distribution of any such Capital Stock or any such rights,
warrants, options or convertible or exchangeable securities, the Exercise Price
shall be reduced by multiplying the Exercise Price in effect immediately prior
to such earliest date by:
(x) if such Capital Stock is Common Stock, a fraction the numerator of
which is the number of shares of Common Stock outstanding on such
earliest date plus the number of shares of Common Stock which could be
purchased at the Current Market Price per share of Common Stock on the
date of such issuance or distribution with the aggregate consideration
(based on the fair market value thereof as determined by the Board of
Directors, whose determination shall be conclusive and described in a
certificate provided to each Holder) received or receivable by the
Company either (A) in connection with such issuance or distribution or
(B) upon the conversion, exchange, purchase or subscription of all
such rights, warrants, options or convertible or exchangeable
securities (the "Aggregate Consideration"), and the denominator of
which is the number of shares of Common Stock outstanding on such
earliest date plus the number of shares of Common Stock to be so
issued or distributed or to be issued upon the conversion, exchange,
purchase or subscription of all such rights, warrants, options or
convertible or exchangeable securities; or
(y) if such Capital Stock is other than Common Stock, a fraction the
numerator of which is the Current Market Price per share of Common
Stock on such earliest date minus an amount equal to (A) the sum of
(1) the Current Market Price per share of such Capital Stock
multiplied by the number of shares of such Capital Stock to be so
issued minus (2) the Aggregate Consideration, divided by (B) the
number of shares of Common Stock outstanding on such date, and the
denominator of which is the Current Market Price per share of Common
Stock on such earliest date.
Such adjustment shall be made successively whenever any such Capital Stock,
rights, warrants, options or convertible or exchangeable securities are so
issued or distributed. In determining whether any rights, warrants, options or
convertible or exchangeable securities entitle the holders thereof to subscribe
for, purchase, convert into or exchange for shares of such Capital Stock at less
than such Current Market Price, there shall be taken into account the fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a certificate provided to each Holder) of any
consideration received or receivable by the Company for such rights, warrants,
options or convertible or exchangeable securities. If any right, warrant, option
or convertible or exchangeable securities, the issuance of which resulted in an
adjustment in the Exercise Price pursuant to this Section 8.1(b), shall expire
and shall not have been exercised, the Exercise Price shall immediately upon
such expiration be recomputed to the Exercise Price which would have been in
effect if such right, warrant, option or convertible or exchangeable securities
had never been distributed or issued. Notwithstanding anything contained in this
paragraph to the contrary, the issuance of Capital Stock upon the exercise of
such rights, warrants or options or the conversion or exchange of such
convertible or exchangeable securities will not cause an adjustment in the
Exercise Price if no such adjustment would have been required at the time such
right, warrant, option or convertible or exchangeable security was issued or
distributed; provided, however, that, if the consideration payable upon such
exercise, conversion or exchange and/or the Capital Stock receivable thereupon
are changed after the time of the issuance or distribution of such right,
warrant, option or convertible or exchangeable security, then such change shall
be deemed to be the expiration thereof without having been exercised and the
issuance or distribution of new options, rights, warrants or convertible or
exchangeable securities.
Notwithstanding anything contained in this Agreement to the contrary,
options, rights or warrants issued or distributed by the Company, including
options, rights or warrants distributed prior to the date of this Agreement, to
holders of Common Stock generally which, until the occurrence of a specified
event or events (a "Trigger Event"), (i) are deemed to be transferred with
Common Stock, (ii) are not exercisable and (iii) are also issued on a pro rata
basis with respect to future issuances of Common Stock, shall be deemed not to
have been issued or distributed for purposes of this Section 8.1(b) (and no
adjustment to the Exercise Price under this Section
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8.1(b) will be required) until the occurrence of the earliest Trigger Event.
Upon the occurrence of a Trigger Event, such options, rights or warrants shall
continue to be deemed not to have been issued or distributed for purposes of
this Section 8.1(b) (and no adjustment to the Conversion Price under this
Section 8.1(b) will be required) if and for so long as each Holder who
thereafter exercises such Holder's Warrants shall be entitled to receive upon
such exercise, in addition to the shares of Common Stock issuable upon such
conversion, a number of such options, rights or warrants, as the case may be,
equal to the number of options, rights or warrants to which a holder of the
number of shares of Common Stock equal to the number of shares of Common Stock
issuable upon exercise of such Holder's Warrants is entitled to receive at the
time of such exercise in accordance with the terms and provisions of and
applicable to such options, rights or warrants. Upon the expiration of any such
options, rights or warrants or at such time, if any, as a Holder is not entitled
to receive such options, rights or warrants upon exercise of such Holder's
Warrants, an adjustment (if any is required) to the Conversion Price shall be
made in accordance with this Section 8.1(b) with respect to the issuance of all
such options, rights and warrants as of the date of issuance thereof, but
subject to the provisions of the preceding paragraph. If any such option, right
or warrant, including any such options, rights or warrants distributed prior to
the date of this Agreement, are subject to events, upon the occurrence of which
such options, rights or warrants become exercisable to purchase different
securities, evidences of indebtedness, cash, properties or other assets or
different amounts thereof, then, subject to the preceding provisions of this
paragraph, the date of the occurrence of any and each such event shall be deemed
to be the date of distribution and record date with respect to new options,
rights or warrants with such new purchase rights (and a termination or
expiration of the existing options, rights or warrants without exercise
thereof). In addition, in the event of any distribution (or deemed distribution)
of options, rights or warrants, or any Trigger Event or other event of the type
described in the preceding sentence, that required (or would have required but
for the provisions of Section 8.3 or this paragraph) an adjustment to the
Exercise Price under this Section 8.1(b) and such options, rights or warrants
shall thereafter have been redeemed or repurchased without having been
exercised, then the Exercise Price shall be adjusted upon such redemption or
repurchase to give effect to such distribution, Trigger Event or other event, as
the case may be, as though it had instead been a cash distribution, equal on a
per share basis to the result of the aggregate redemption or repurchase price
received by holders of such options, rights or warrants divided by the number of
shares of Common Stock outstanding as of the date of such repurchase or
redemption, made to holders of Common Stock generally as of the date of such
redemption or repurchase.
Notwithstanding anything contained in this Section 8.1(b) to the contrary,
no adjustment shall be made in the Exercise Price pursuant to this Section
8.1(b) with respect to the issuance of Common Stock or options or other rights
to purchase Common Stock pursuant to any employee stock purchase, bonus, award,
grant, option or ownership plan (including, without limitation, an employee
stock ownership plan which is part of an employee benefit plan qualified under
Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"), an
employee stock option or incentive stock option plan qualified under Section 422
of the Code and a restricted stock plan), including the issuance of Common Stock
upon the exercise of such options; provided, that, for purposes of this
paragraph, the term "employee" includes directors, consultants and advisors and
the term "plan" means a plan, program or arrangement in which 5 or more persons
are eligible to participate (or, if only directors of the Company are eligible
to participate and there are fewer than 5 such directors, in which all of such
directors are eligible to participate).
(c) If the Company shall pay or distribute, as a dividend or otherwise,
generally to holders of Common Stock or any class or series of Capital Stock
which is convertible into or exercisable or exchangeable for Common Stock any
assets, properties or rights (including, without limitation, evidences of
indebtedness of the Company, any subsidiary or any other person or entity, cash
or Capital Stock or other securities of the Company, any subsidiary or any other
person or entity, but excluding payments and distributions as described in
Section 8.1(a) or 8.1(b), dividends and distributions in connection with the
liquidation, dissolution or winding up of the Company in its entirety and
distributions consisting solely of cash described in Section 8.1(d)), then in
each such case the Exercise Price shall be reduced by multiplying the Exercise
Price in effect immediately prior to the date of such payment or distribution by
a fraction, the numerator of which is the Current Market Price per share of
Common Stock on the record date for the determination of stockholders entitled
to receive such payment or distribution less the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a certificate provided to each Holder) on such record date of
the assets or evidences of indebtedness so distributed attributable to one share
of Common Stock (the amount so attributable equaling the aggregate fair
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market value of such indebtedness or assets, as so determined by the Board of
Directors, divided by the number of shares of Common Stock outstanding on such
record date), and the denominator shall be the Current Market Price per share of
Common Stock on such record date. Such adjustment shall become effective
immediately after the record date for the determination of shareholders entitled
to receive such distribution.
(d) If the Company shall, by dividend or otherwise, make a distribution
(other than in connection with the liquidation, dissolution or winding up of the
Company in its entirety), generally to holders of Common Stock or any class or
series of Capital Stock which is convertible into or exercisable or exchangeable
for Common Stock, consisting solely of cash where (x) the sum of (i) the
aggregate amount of such cash plus (ii) the aggregate amount of all cash so
distributed (by dividend or otherwise) to such holders within the 12-month
period ending on the record date for determining stockholders entitled to
receive such distribution with respect to which no adjustment has been made to
the Exercise Price pursuant to this Section 8.1(d) exceeds (y) 10% of the result
of the multiplication of (1) the Current Market Price per share of Common Stock
on such record date times (2) the number of shares of Common Stock outstanding
on such record date, then the Exercise Price shall be reduced, effective
immediately prior to the opening of business on the day following such record
date, by multiplying the Exercise Price in effect immediately prior to the close
of business on the day prior to such record date by a fraction, the numerator of
which is the Current Market Price per share of Common Stock on such record date
less the aggregate amount of cash per share so distributed and the denominator
of which is such Current Market Price; provided, however, that, if the aggregate
amount of cash per share is equal to or greater than such Current Market Price,
then, in lieu of the foregoing adjustment, adequate provision shall be made so
that each Holder shall have the right to receive upon conversion (with respect
to each share of Common Stock issued upon such conversion and in addition to the
Common Stock issuable upon conversion) the aggregate amount of cash per share
such Holder would have received had such Holder's Warrants been exercised
immediately prior to such record date. In no event shall the Exercise Price be
increased pursuant to this Section 8.1(d); provided, however, that if such
distribution is not so made, the Exercise Price shall be adjusted to be the
Exercise Price which would have been in effect if such distribution had not been
declared. For purposes of this paragraph of this Section 8.1(d), such aggregate
amount of cash per share shall equal such sum divided by the number of shares of
Common Stock outstanding on such record date.
(e) Anything in this Section 8 to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the Exercise Price, in addition to
those required by this Section 8.1, as it in its discretion shall determine to
be advisable.
(f) For purposes of this Agreement, "Current Market Price" means, when used
with respect to any security as of any date, the last sale price, regular way,
or, in case no such sale takes place on such date, the average of the closing
bid and asked prices, regular way, in either case as reported for consolidated
transactions on the Nasdaq National Market system or, if the security is not
listed or admitted to trading on the Nasdaq National Market system, as reported
for consolidated transactions with respect to such security listed on the
principal national securities exchange on which such security is listed or
admitted to trading or, if the security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotations System or such other system then in use or, if the security is not
quoted by any such organization, the average of the closing bid and asked prices
furnished by a New York Stock Exchange member firm selected by the Company.
"Current Market Price" means, when used with respect to a security as to which
none of the above-mentioned prices are available and with respect to any
property other than a security, as of any date, the market value of such
security or property on such date as determined by the Board of Directors of the
Company in good faith, which shall be entitled to rely for such purposes on the
advice of any firm of investment bankers or appraisers having familiarity with
such property.
8.2 MERGER OR CONSOLIDATION. In the event of (i) any reclassification
(including, without limitation, a reclassification effected by means of an
exchange or tender offer by the Company or any Subsidiary) or change of
outstanding Common Stock (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), (ii) any consolidation, merger or combination of the Company
with another corporation as a result of which holders of Common Stock shall be
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entitled to receive securities or other assets (including cash) with respect to
or in exchange for Common Stock or (iii) any sale or conveyance of the assets of
the Company as, or substantially as, an entirety to any other corporation as a
result of which holders of Common Stock shall be entitled to receive securities
or other assets (including cash) with respect to or in exchange for Common
Stock, then the Company or the successor or purchasing corporation, as the case
may be, shall execute and deliver to the Holder upon surrender of the Warrant
Certificate held by such Holder a supplemental warrant agreement providing that
the holder of each Warrant then outstanding or to be outstanding shall have the
right thereafter (until the expiration of such Warrant) to receive, upon full
exercise of such Warrant, the kind and amount of shares of stock and/or other
securities and/or property receivable upon such consolidation or merger, by a
holder of the number of shares of Common Stock for which such Warrant might have
been exercised immediately prior to such consolidation or merger. Such
supplemental warrant agreement shall provide for adjustments which shall be as
nearly equivalent as practicable to the adjustments provided for in this Section
8. The above provision of this subsection shall similarly apply to successive
consolidations or mergers.
8.3 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment of the
Exercise Price shall be made if the amount of said adjustment shall be less than
two cents (2(cent)) per Warrant Security, provided, however, that in such case
any adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to at least two cents (2(cent)) per Warrant Security.
8.4 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of the
Exercise Price pursuant to the provisions of Section 8.1(a) or (b), the number
of shares of Common Stock issuable upon exercise at the adjusted Exercise Price
of each Warrant shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock issuable upon exercise of
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.5 CERTIFICATE OF ADJUSTMENT. After each adjustment of the Exercise Price
or the amount of Warrant Securities purchasable upon exercise of Warrants
pursuant to this Section 8, the Company will promptly prepare a certificate
signed by the Chairman or President, and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, of the Company setting
forth: (i) the Exercise Price, as so adjusted; (ii) the amount of Warrant
Securities purchasable upon exercise of each Warrant after such adjustment; and
(iii) a brief statement of the facts accounting for such adjustment. The Company
will promptly file such certificate with its records and cause a brief summary
thereof to be sent by ordinary first class mail to each Holder at his or her
last address as it shall appear on the registry books of the Company.
8.6 VALIDITY OF WARRANT CERTIFICATE. Irrespective of any adjustments or
changes in the Exercise Price or the amount of Warrant Securities purchasable
upon exercise of Warrants, Warrant Certificates theretofore and thereafter
issued shall continue to express the Exercise Price per share and the amount of
Warrant Securities purchasable thereunder as of the date such Warrant
Certificates were originally issued; provided, the Holders shall be entitled to
exercise Warrants represented by such Warrant Certificates after giving effect
to each such adjustment and change, and such Warrant Certificate shall be deemed
to incorporate each such adjustment and change as if new Warrant Certificates
reflecting each such adjustment and change had been issued to the Holders.
9. Exchange, Replacement and Transfer of Warrant Certificates.
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(a) Each Warrant Certificate is exchangeable, without expense, and subject
to the provisions of Section 5 and 9(c), upon the surrender thereof by the
Holder at the principal executive office of the Company, for a new Warrant
Certificate of like tenor and date representing in the aggregate the right to
purchase the same number of Warrant Securities in such denominations as shall be
designated by the Holder thereof at the time of such surrender.
(b) Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental
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thereto, and upon surrender and cancellation of such Warrant Certificates, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor in lieu thereof.
(c) The Company will maintain a register containing the name and address of
the Holder of each Warrant Certificate. Any Holder may change its or his address
as shown on the warrant register by written notice to the Company requesting
such change. Subject to the provisions of Section 5 hereof, the Warrants and all
rights thereunder are transferrable, in whole and not in part, upon surrender of
the Warrant Certificates representing such Warrants with a properly executed
assignment (in the form of Exhibit B hereto) at the principal office of the
Company. Until any transfer of the Warrants is made in the warrant register, the
Company may treat the Holder of such Warrants as the absolute owner thereof for
all purposes; provided, however, that if and when the Warrant Certificate
representing such Warrants is properly assigned in blank, the Company may (but
shall not be obligated to) treat the bearer thereof as the absolute owner
thereof for all purposes, notwithstanding any notice to the contrary.
10. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of the Warrants to purchase Common Stock, nor shall it be required to
issue scrip or pay cash in lieu of fractional interests, it being the intent of
the parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of shares of Common Stock or other
securities, properties or rights.
11. RESERVATION AND LISTING OF SECURITIES. The Company shall at all times
reserve and keep available out of its authorized capital stock, solely for the
purpose of issuance upon the exercise of the Warrants, such number of shares of
Common Stock or other securities, property or rights as shall be issuable upon
exercise thereof. The Company covenants and agrees that, upon exercise of the
Warrants and payment of the Exercise Price therefor, all shares of Common Stock
and other securities issued by the Company upon such exercise shall be duly and
validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any security holder of the Company. As long as the Warrants shall be
outstanding, the Company shall use its reasonable best efforts to cause the
Common Stock issuable upon the exercise of the Warrants to be listed (subject to
official notice of issuance) on all securities exchanges on which the Common
Stock may then be listed and/or quoted on the Nasdaq Stock Market if the Common
Stock issued to the public is so quoted.
12. NOTICES TO HOLDERS. Nothing contained in this Agreement shall be
construed as conferring upon the Holders the right to receive dividends or to
vote or to consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other matter or as
having any rights whatsoever as a stockholder of the Company. If, however, at
any time prior to the expiration of the Warrants and their exercise, any of the
following events shall occur:
(a) the Company shall set a record date for the purpose of entitling
them to receive a dividend or distribution payable otherwise than in cash,
or a cash dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
(b) the Company shall offer to all the holders of shares of Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall
be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event to each Holder at least 10 days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution or offer, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
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as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with any of the events
described in this Section 12.
13. Notices.
-------
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made and sent when delivered,
or mailed by registered or certified mail, return receipt requested:
(a) If to a Holder, to the address of such Holder as shown on the
books of the Company; or
(b) If to the Company, to the address set forth in Section 3
hereof or to such other address as the Company may designate by notice
to the Holders.
14. SUPPLEMENTS AND AMENDMENTS. The Company and the Initial Purchaser may
from time to time supplement or amend this Agreement without the approval of any
Holders (other than the Initial Purchaser) in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Initial Purchaser may deem necessary or desirable and which the Company and the
Initial Purchaser deem shall not adversely affect the interests of the Holders
in any material respect.
15. SUCCESSORS. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
16. TERMINATION. This Agreement shall terminate at the close of business on
April 2, 2004. Notwithstanding the foregoing, the indemnification provisions of
Section 7 shall survive such termination until the close of business on April 2,
2009.
17. GOVERNING LAW. This Agreement and each Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and for all purposes shall be construed in accordance with the laws of
said State without giving effect to the rules of said State governing the
conflicts of laws.
18. ENTIRE AGREEMENT; MODIFICATION. This Agreement (including the Purchase
Agreement to the extent portions thereof are referred to herein) contains the
entire understanding between the parties hereto with respect to the subject
matter hereof. Except as set forth in Section 14 hereof, this Agreement may not
be modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
19. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
20. CAPTIONS. The caption headings of the Sections of this Agreement are
for convenience of reference only, and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person, corporation or entity other than the Company
and the Initial Purchaser and any other Holders of Warrants and/or Warrant
Securities any legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole and exclusive benefit of the Company
and the Initial Purchaser and any other Holders of Warrants and/or Warrant
Securities.
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22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
[SEAL] HYBRIDON, INC.
By: /s/ E. Andrews Grinstead, III
---------------------------------
Name: E. Andrews Grinstead, III
Title: Chairman, President and Chief
Attest: Executive Officer
/s/ Anthony J. Payne
- -----------------------------
Name: Anthony J. Payne
Title: Chief Financial Officer
FORUM CAPITAL MARKETS L. P.
By: /s/ C. Keith Hartley
----------------------------------
Name: C. Keith Hartley
Title: Senior Managing Director
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, IF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, IS DELIVERED THAT SUCH AN EXEMPTION IS AVAILABLE FOR SUCH TRANSFER.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, APRIL 2, 2002
No. W- Warrants
---
WARRANT CERTIFICATE
This Warrant Certificate certifies that , or registered assigns, is
the registered holder of Warrants to purchase initially, at any time from
March , 1998 until 5:30 p.m. New York time on April 2, 2002 (the "Expiration
Date"), up to fully-paid and non-assessable shares of Common Stock,
par value $.001 per share (the "Common Stock"), of HYBRIDON, INC. (the
"Company"), at the initial exercise price, subject to adjustment in certain
events (the "Exercise Price"), of $7.0125 per share upon surrender of this
Warrant Certificate and payment of the Exercise Price, at an office or agency of
the Company, but subject to the conditions set forth herein and in the warrant
agreement dated as of March 26, 1997 between the Company and Forum Capital
Markets L.P. (the "Warrant Agreement"). Payment of the Exercise Price, shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company and upon surrender of this Warrant
Certificate.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants. In the event that any provision of this
Warrant Certificate conflicts with or is inconsistent with the terms of the
Warrant Agreement, the terms of the Warrant Agreement shall supersede the
provisions of this Warrant Certificate.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the amount the type and/or number of the Company's
securities issuable hereunder may, subject to certain conditions, be adjusted.
Subject to Section 8.6 of the Warrant Agreement, in such event, the Company
will, at the request of the holder, issue a new Warrant Certificate evidencing
the adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; provided, however, that the failure
of the Company to issue such new Warrant Certificates shall not in any way
change, alter or otherwise impair the rights of the holder as set forth in the
Warrant Agreement.
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20
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company and subject to compliance with
the terms of the Warrant Agreement, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of , 199
----------------------- --
HYBRIDON, INC.
[SEAL] By:
----------------------------
Name:
Title:
Attest:
- ---------------------------
Name:
Title:
A-2
21
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase shares of Common
Stock and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
Hybridon, Inc. in the amount of $ , all in accordance with the terms of
Section 3 of the Initial Purchaser's Warrant Agreement dated as of
March 26, 1997 between Hybridon, Inc., and Forum Capital Markets L.P. The
undersigned requests that a certificate for such securities be registered in
the name of whose address is
and that such certificate be delivered to whose address is
.
Dated:
-------------------
Signature
--------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
----------------------------------------
(Insert Social Security or Other Identifying
Number of Holder)
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22
ANNEX B
TO WARRANT CERTIFICATE
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and transfers
unto
(Please print name and address of transferee)
the within Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
Attorney to transfer the within Warrant Certificate on the books of the within-
named Company, with full power of substitution.
Dated:
------------------- Signature:
------------------------------------
(Signature must conform in all respects to name
of holder as specified on the face of the
Warrant Certificate.)
----------------------------------------------
(Insert Social Security or Other Identifying
Number of Assignee)
A-4