1
Exhibit 10.5
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY BE OFFERED OR SOLD ONLY PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT THEREUNDER OR AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION AND IN
COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS.
DURAMED PHARMACEUTICALS, INC.
Warrant for the Purchase of Shares of Common Stock
--------------------------------------------------
No. W-2 200,000 Shares
FOR VALUE RECEIVED, Duramed Pharmaceuticals, Inc. (the
"Corporation"), a Delaware corporation, hereby certifies that The Provident
Bank, an Ohio banking corporation ("Provident") or its assignee is entitled to
purchase from the Corporation, on or before December 31, 2005 (the "Termination
Date"), Two Hundred Thousand (200,000) fully paid and non-assessable shares of
the Common Stock, $.01 par value per share, of the Corporation, for a purchase
price of Eighteen Dollars and Twelve and One-Half Cents ($18.125) per share.
Hereinafter, (i) said common stock, together with any other equity securities
which may be issued by the Corporation in addition thereto or in substitution
therefor, is referred to as "Common Stock", (ii) the shares of Common Stock
purchasable hereunder are referred to as the "Warrant Shares", (iii) the
aggregate purchase price payable hereunder for the Warrant Shares is referred
to as the "Aggregate Warrant Price" and (iv) the price payable hereunder for
each of the Warrant Shares is referred to as the "Per Share Warrant Price".
The Per Share Warrant Price and the number of Warrant Shares are subject to
adjustment as hereinafter provided.
1. EXERCISE OF WARRANT. This Warrant may be exercised
in whole or in part on or before the Termination Date by the Holder (as defined
in Section 5 below) of this Warrant by the surrender of this Warrant (with the
subscription form at the end hereof duly executed) at the principal office of
the Corporation, together with payment of the Aggregate Warrant Price for the
Warrant Shares being purchased. Payment for Warrant Shares shall be made by
check payable to the order of the Corporation.
Alternatively, all or any part of such payment may be made by
the surrender by such holder to the Corporation of any instrument evidencing
preferred stock or indebtedness of the Corporation, or any other corporation of
which the Corporation owns at least 50% of the voting stock, which at the date
of issue
2
thereof had a maturity of one year or more. All preferred stock or
indebtedness so surrendered shall be credited against such purchase price in an
amount equal to the liquidation value or outstanding principal amount
respectively thereof plus accrued but unpaid dividends or interest respectively
to the date of surrender.
The exercise price may also be paid by surrendering the right
to a number of shares issuable upon exercise of the Warrant that have a fair
market value equal to or greater than the required exercise price. The fair
market value shall be the last reported price on the most recent date of
trading in the Common Stock or successor class of common stock of the
Corporation. If the Common Stock or a successor class of common stock of the
Corporation is not traded, fair market value shall be as determined by the
Board of Directors of the Corporation.
Upon such surrender of this Warrant the Corporation will issue
a certificate or certificates in the name of the Holder for the largest number
of whole shares of Common Stock to which the Holder shall be entitled and, in
lieu of any fractional share of Common Stock to which the Holder shall be
entitled, cash equal to the fair value of such fractional share (determined in
such manner as the Board of Directors of the Corporation shall reasonably
determine).
2. RESERVATION OF WARRANT SHARES. The Corporation will
at all times reserve and keep available, solely for issuance or delivery upon
the exercise of this Warrant, the shares of Common Stock and Other Securities
(as defined below) receivable upon the exercise of this Warrant, free and clear
of all restrictions on sale or transfer and free and clear of all pre-emptive
rights.
3. FULLY PAID STOCK; TAXES. The Corporation agrees that
the Shares of Common Stock represented by each and every certificate for
Warrant Shares or Other Securities delivered on the exercise of this Warrant
shall, at the time of such delivery, be validly issued and outstanding, fully
paid and non-assessable, and the Corporation will take all such action as may
be necessary to assure that the par value or stated value per share of Common
Stock or other capital stock included in the Other Securities is at all times
equal to or less than the then Per Share Warrant Price. The Corporation
further covenants and agrees that it will pay, when due and payable, all
federal and state stamp, original issue or similar taxes, if any, which are
payable in respect of the issue of this Warrant and/or any Warrant Share or
certificates therefor but excluding any federal, state or local taxes based on
the income of the Holder.
4. ADJUSTMENTS OF PER SHARE WARRANT PRICE. (a) If at
any time after August 21, 1995 shares of Common Stock are issued
- 2 -
3
as a dividend or other distribution on Common Stock, the Per Share Warrant
Price in effect at the opening of business on the business day next succeeding
the date fixed for the determination of the shareholders entitled to receive
such dividend or other distribution shall be decreased to the Per Share Warrant
Price determined by multiplying said Per Share Warrant Price so in effect by a
fraction, the numerator of which shall be the number of shares of Common Stock
issued and outstanding at the close of business on the date fixed for such
determination and the denominator of which shall be the sum of said number of
shares issued and outstanding at the close of business on the date fixed for
such determination and the number of shares constituting such dividend or other
distribution, such decrease becoming effective immediately after the opening of
business on the business day next succeeding the date fixed for such
determination.
(b) If at any time after August 22, 1995 the outstanding
shares of Common Stock shall be subdivided into a greater number of shares or
outstanding shares shall be combined into a smaller number of shares, the per
Share Warrant Price in effect at the opening of business on the business day
next succeeding the day upon which such subdivision or combination becomes
effective shall be decreased or increased, as the case may be, to the Per Share
Warrant Price determined by multiplying said Per Share Warrant Price so in
effect by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately before such subdivision or combination
becomes effective and the denominator of which shall be the number of such
shares outstanding at the opening of business on the business day next
succeeding the day upon which such subdivision or combination becomes
effective.
(c) If at any time after August 22, 1995 the Corporation
shall issue shares of Common Stock (other than pursuant to any right to
purchase such shares in existence as of August 22, 1995 or pursuant to any
stock option plan for employees or directors of the Corporation) or securities
convertible into shares of Common Stock or rights, options (other than pursuant
to any right to purchase such shares in existence as of August 22, 1995 or
pursuant to any stock option plan for employees or directors of the
Corporation) or warrants (other than this Warrant or a warrant which may be
issued to Schein Pharmaceutical, Inc. under an Agreement dated July 10, 1995)
containing the right to subscribe for or purchase shares of Common Stock or
securities convertible into shares of Common Stock for a price per share of
Common Stock, in the case of the issuance of Common Stock, or for a price per
share of Common Stock initially deliverable upon conversion, exchange or
exercise of such convertible securities or rights, options or warrants
(including all consideration paid to acquire such convertible securities or
rights, options or warrants) (the "Issue Price"), less than the then current
Per Share Warrant Price on the date
- 3 -
4
the Corporation fixed the offering, conversion, exchange or exercise price of
such shares (the "Record Date"), then the then applicable Per Share Warrant
Price shall be adjusted by multiplying it by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately prior to the
Record Date plus the number derived by dividing (x) the product of the number
of shares of Common Stock to be issued upon such offering, conversion, exchange
or exercise and the Issue Price by (y) the then current Per Share Warrant Price
and the denominator of which is the number of shares of Common Stock
outstanding immediately prior to the Record Date plus the number of shares of
Common Stock to be issued upon such offering, conversion, exchange or exercise.
Such adjustment shall be made whenever such shares, convertible securities,
rights, options or warrants are issued, and shall become effective immediately
after the effective date of such event retroactive to the Record Date, if any,
for such event.
(d) If at any time after August 22, 1995 the Corporation
shall distribute to all or substantially all holders of Common Stock either (i)
evidences of indebtedness or assets (excluding cash dividends or distributions)
or (ii) any other securities of the Corporation or any rights, warrants,
options to subscribe for, purchase or otherwise acquire securities of the
Corporation in a transaction not covered by paragraph (c) above (any of which
are referred to herein as "Other Securities"), then and in any such case the
Corporation shall either distribute such Other Securities to the Holder of this
Warrant or reserve for the benefit of the Holder of this Warrant such amount of
such Other Securities as the Holder of this Warrant would have owned or been
entitled to receive immediately following such action had this Warrant been
exercised for shares of Common Stock immediately prior thereto. In addition,
the Corporation shall either distribute to, or reserve for the benefit of, the
Holder of this Warrant any principal, interest, dividends or other property
payable with respect to such Other Securities as and when such interest,
dividends or other property is distributed to the holders of Common Stock. If
such a reserve is made, as and when this Warrant is exercised, the Holder shall
be entitled to receive from the Corporation such Holder's share of such Other
Securities together with the principal, interest, dividends or other property
payable with respect thereto.
(e) Upon each adjustment of the Per Share Warrant price
pursuant to this Section 4, the Holder of this Warrant shall thereafter (until
another such adjustment) be entitled to purchase, at the adjusted Per Share
Warrant Price applicable at the date purchase rights hereunder are exercised,
the number of shares of Common Stock, calculated to the nearest full share,
obtained by:
- 4 -
5
(i) multiplying (A) the number of Warrant Shares
deliverable upon exercise of such Warrant at the close of
business on the business day next preceding the business day
on which the Per Share Warrant Price is so adjusted by (B) the
Per Share Warrant Price in effect at the close of business on
such next preceding business day; and
(ii) by dividing (C) the Per Share Warrant Price as
adjusted into (D) the amount determined pursuant to the
foregoing clause (e)(i).
Irrespective of any adjustment in the Per Share Warrant Price and the number of
Warrant Shares purchasable under this Warrant, any Warrant thereafter issued
shall continue to express the Per Share Warrant Price and the number of shares
purchasable in the same manner as the Per Share Warrant Price and the number of
shares purchasable were expressed in this Warrant when initially issued.
(f) Upon any adjustment of the Per Share Warrant Price
and/or an increase or decrease in the number of Warrant Shares purchasable upon
the exercise of this Warrant, then, and in each such case, the Corporation will
promptly obtain a certificate of a firm of independent public accountants of
recognized national standing selected by its Board of Directors (who may be the
regular auditors of the Corporation) setting forth the adjusted Per Share
Warrant Price and the increased or decreased number of Warrant Shares
purchasable upon the exercise of this Warrant, a brief statement of the facts
accounting for such adjustment and its opinion to the effect that such
adjustment has been made in accordance with the provisions of this Section 4.
Upon receipt of such option, the Corporation will promptly mail a copy thereof
to the Holder of this Warrant.
(g) If, on or prior to the Termination Date, the
Corporation shall consolidate with or merge into another corporation, or
another corporation shall merge into the Corporation in a merger in which
shares of Common Stock are converted into a right to receive cash, property or
other securities, or the Corporation shall sell or transfer all or
substantially all of the assets of the Corporation, or there shall be any
reclassification of Common Stock of the Corporation, other than a subdivision
or combination of the outstanding Common Stock, the Corporation shall take such
action so that the Holder of this Warrant will thereafter receive upon the
exercise hereof the securities or property to which a holder of the number of
shares of Common Stock then deliverable upon the exercise of such Warrant would
have been entitled to receive upon such consolidation, merger, sale, transfer
or reclassification if such
- 5 -
6
Warrant had been exercised in full immediately prior to such transaction.
(h) All calculations under this Section 4 shall be made
to the nearest one-hundredth of a cent or to the nearest one thousandth of a
share, as the case may be. No adjustment shall be required unless such
adjustment would result in an increase or decrease of at least one (1%) percent
of the Per Share Warrant Price; provided, however, that any adjustments which
by reason of this paragraph (h) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
(i) If at any time, as a result of an adjustment made
pursuant to paragraph (d) above, the Holder shall become entitled to purchase
any Other Securities, thereafter the number of such Other Securities
purchasable upon exercise of this Warrant and the price of the Other Securities
shall be subject to adjustment from time to time and in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to this
Warrant contained in paragraphs (a) through (h), inclusive above.
(j) Upon the expiration of any rights, options, warrants
or conversion of exchange privileges which caused an adjustment to the Per
Share Warrant Price to be made, if any thereof shall not have been exercised,
the Per Share Warrant Price shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been originally adjusted
(or had the original adjustment not been required, as the case may be) as if
(i) the only shares of Common Stock so issued were the shares of Common Stock,
if any, actually issued or sold upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (ii) such shares of Common
Stock, if any, were issued or sold for the consideration actually received by
the Corporation upon such exercise plus the aggregate consideration, if any,
actually received by the Corporation for the issuance, sale or grant of all
such rights, options, warrants or conversion or exchange privileges, whether or
not exercised; provided further, that no such readjustment shall have the
effect of decreasing the Per Share Warrant Price by an amount in excess of the
amount of the adjustment initially made in respect to the issuance, sale or
grant of such rights, options, warrants or conversion or exchange privileges.
(k) Upon any exercise of this Warrant at a time when
there are dividends or distributions unpaid (whether as to Common Stock or
Other Securities or other property payable with respect hereto) and as to which
the dividend date or other date fixed for payment has passed, then, (i) to the
fullest extent permitted by law, such unpaid dividends or distributions shall
be paid by the Corporation contemporaneously with the exercise of this Warrant,
and (ii) to the extent payment of such unpaid dividends or distributions is not
legally permitted, then the Per Share
- 6 -
7
Warrant Price shall be further adjusted by increasing the number of shares of
Common Stock or Other Securities or property issuable upon conversion to take
into account the value of such unpaid dividends or other distributions in
determining the amount of Common Stock or Other Securities to be issued upon
exercise of this Warrant.
5. LIMITED TRANSFERABILITY. (a) This Warrant and the
Warrant Shares have not been registered under the Securities Act of 1933 and
may be transferred only pursuant to an effective registration thereunder or an
exemption from registration thereunder and in compliance with applicable state
securities laws. This Warrant may not be transferred if such transfer would
require any registration or qualification under, or cause the loss of exemption
from registration or qualification under, such Act or any applicable state
securities law with respect to the Warrants or the Warrant Shares. This
Warrant and any Warrant Shares shall bear an appropriate legend with respect to
such restrictions on transfer. This Warrant is transferable only upon the
books which the Corporation shall cause to be maintained for such purpose. Any
assignment or transfer may be made by surrendering this Warrant to the
Corporation together with the attached assignment form properly executed by the
assignor or transferor. Upon such surrender the Corporation will execute and
deliver, in the case of an assignment or transfer in whole, a new Warrant in
the name of the assignee or transferee or, in the case of an assignment or
transfer in part, a new Warrant in the name of the assignee or transferee named
in such instrument of assignment or transfer and a new Warrant in the name of
the assignor or transferor covering the number of Warrant Shares in respect of
which this Warrant shall not be assigned or transferred to the assignee or
transferee.
(b) The Corporation may treat the registered holder of
this Warrant (the "Holder") as it appears on its books at any time as the owner
of this Warrant for all purposes. The Corporation shall permit the Holder of
this Warrant or his duly authorized attorney, upon written request during
ordinary business hours, to inspect and copy or make extracts from its books
showing the Holders of Warrants. All Warrants will be dated the same date as
this Warrant.
6. Notices to Holder. If at any time,
-----------------
(a) the Corporation shall take any action which
would require an adjustment in the Per Share Warrant Price or in the number of
shares issuable upon exercise of this Warrant; or
(b) the Corporation shall authorize the making to
the holders of its Common Stock of any non-cash distribution on such Common
Stock; or
- 7 -
8
(c) the Corporation shall declare any dividend (or
any other distribution) on its Common Stock; or
(d) there shall be any capital reorganization or
reclassification of the Common Stock, or any consolidation or merger to which
the Corporation is a party, or any sale or transfer of all or substantially all
of the assets of the Corporation; or
(e) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation;
then, in any one or more of such cases, the Corporation shall give written
notice to the Holder, not less than twenty (20) days before any record date or
other date set for definitive action, or for any vote or action by consent by
stockholders with respect thereto, or of the date on which such reorganization,
reclassification, sale, consolidation, merger, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also set
forth such facts as shall indicate the effect of such action (to the extent
such effect may be known at the date of such notice) on the current Per Share
Warrant Price and the kind and amount of shares of Common Stock and other
securities and property deliverable upon exercise of this Warrant. Such notice
shall also specify the date as of which the holders of the Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, sale, consolidation, merger, dissolution, liquidation or
winding up, as the case may be. Notwithstanding the foregoing, failure to give
such notice shall not affect the validity of any such action.
7. LOSS, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Corporation of the loss, theft, destruction or mutilation
of this Warrant, and of indemnity in form and amount reasonably satisfactory to
the Corporation, if lost, stolen or destroyed, and upon surrender and
cancellation of this Warrant, if mutilated, and upon reimbursement of the
Corporation's reasonable incidental expenses, the Corporation shall execute and
deliver to the Holder a new Warrant of like date, tenor and denomination.
8. WARRANT HOLDER NOT A SHAREHOLDER. This Warrant does
not confer upon the Holder any rights or liabilities as a shareholder prior to
the exercise hereof.
9. COMMUNICATION. No notice or other communication
under this Warrant shall be effective unless, but any notice or other
communication shall be effective and shall be deemed to have been given if, the
same is in writing and is delivered by hand or by facsimile to
- 8 -
9
(a) the Corporation at 7155 East Kemper Road,
Cincinnati, Ohio 45249, or such other address as the
Corporation has designated in writing to the Holder, or
(b) the Holder at One East Fourth Street,
Cincinnati, Ohio 45202, Attn: President, or such other address
as the Holder has designated in writing to the Corporation.
10. HEADINGS. The headings of this Warrant have been
inserted as a matter of convenience, and shall not affect the construction
hereof.
11. AMENDMENTS. This Warrant may be amended only by
written agreement of the Corporation and the Holder.
12. APPLICABLE LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State of Ohio applicable to
agreements made and to be performed therein.
IN WITNESS WHEREOF, DURAMED PHARMACEUTICALS, INC. has executed
this Warrant as of the 22nd day of August, 1995.
DURAMED PHARMACEUTICALS, INC.
By /s/ Timothy J. Holt
-------------------------------
Vice President
- 9 -
10
SUBSCRIPTION
The undersigned, ____________________, pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for and
purchase ______ shares of Common Stock of DURAMED PHARMACEUTICALS, INC. covered
by said Warrant, and makes payment therefor in full at the price per share
provided by said Warrant.
Dated: Signature
---------------------- ------------------------------
Address
---------------------------------
o
---------------- ----------------
ASSIGNMENT
FOR VALUE RECEIVED ___________________ hereby sells, assigns
and transfers unto ______________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
____________________, attorney, to transfer said Warrant on the books of
DURAMED PHARMACEUTICALS, INC. _________ hereby agrees to be bound by the terms
of the Warrant as defined therein.
o
--------------- ---------------
- 10 -