EXHIBIT 10.5
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT. THIS
WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES ACTS. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.
CYPRESS BIOSCIENCE, INC.
COMMON STOCK PURCHASE WARRANT
Date of Issuance: March 26, 1999
For Value Received, Cypress Bioscience, Inc., a Delaware corporation (the
"Company"), hereby grants Fresenius Aktiengesellschaft, or its registered
assigns (the "Registered Holder"), the right to purchase from the Company during
the Exercise Period (as defined below) up to 342,466 shares of the Company's
Common Stock at a price per share of $7.50 (as adjusted from time to time
hereunder, the "Exercise Price"). Certain capitalized terms used herein are
defined in Section 4 hereof. The amount and kind of securities obtainable
pursuant to the rights granted hereunder and the Exercise Price for such
securities are subject to adjustment pursuant to the provisions contained in
this Warrant.
This Warrant is subject to the following provisions:
1. EXERCISE OF WARRANT.
1.1 Exercise Period. The Registered Holder may exercise, in whole or
in part (but not as to a fractional share of Common Stock), the purchase rights
represented by this Warrant at any time and from time to time after the Date of
issuance of this Warrant to and including the third (3rd) anniversary of the
Date of Issuance set forth above (the "Exercise Period").
1.2 Exercise Procedure.
(a) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
(i) a completed exercise agreement, as described in paragraph
1.3 below (the "Exercise Agreement"), executed by the Person exercising all or
part of the purchase rights represented by this Warrant (the "Purchaser");
(ii) this Warrant;
(iii) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form set forth in Exhibit II
hereto evidencing the assignment
1.
of this Warrant to the Purchaser, in which case the Registered Holder shall
comply with the provisions set forth in Section 6 hereof; and
(iv) a check payable to the Company in an amount equal to the
product of the Exercise Price multiplied by the number of shares of Common Stock
being purchased upon such exercise (the "Aggregate Exercise Price").
(b) Certificates for shares of Common Stock purchased upon exercise
of this Warrant shall be delivered by the Company to the Purchaser within ten
business days after the date of the Exercise Time. Unless this Warrant has
expired or all of the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially identical hereto,
representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(c) The Common Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser and outstanding and the
Purchaser shall be deemed for all purposes to have become the record holder of
such Common Stock at the Exercise Time.
(d) The issuance of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Common Stock. Each share of Common Stock issuable upon exercise of
this Warrant shall, upon payment of the Exercise Price therefor, be fully paid
and nonassessable and free from all liens and charges with respect to the
issuance thereof.
(e) The Company shall not close its books against the transfer of
this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as may
be necessary to assure that the par value per share of the unissued Common Stock
acquirable upon exercise of this Warrant is at all times equal to or less than
the Exercise Price then in effect.
(f) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
warrant (including, without limitation, making any filings required to be made
by the Company).
(g) The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
issuance upon the exercise of the Warrants, such number of shares of Common
Stock issuable upon the exercise of all outstanding Warrants. All shares of
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any applicable
law
2.
or governmental regulation or any requirements of any domestic securities
exchange upon which shares of Common Stock may be listed (except for official
notice of issuance, which shall be immediately delivered by the Company upon
each such issuance). The Company shall not take any action that would cause the
number of authorized but unissued shares of Common Stock to be less than the
number of such shares required to be reserved hereunder for issuance upon
exercise of this Warrant.
(h) Any certificate for shares of Common Stock issued upon the
exercise of this Warrant shall contain a legend in substantially the form of the
legend set forth on the first page of this Warrant except if such exercise is
effected in connection with a Public Offering of the Company's capital stock and
shares of the Common Stock issuable upon the exercise of this Warrant are
included in such registered offering.
1.3 Exercise Agreement. Upon any exercise of this Warrant, the Exercise
Agreement shall be substantially in the form set forth in Exhibit I hereto,
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except that if the shares of Common Stock are not to be issued in the name of
the Person in whose name this Warrant is registered, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the shares
of Common Stock are to be issued, and if the number of shares of Common Stock to
be issued does not include all the shares of Common Stock purchasable hereunder,
it shall also state the name of the Person to whom a new Warrant for the
unexercised portion of the rights hereunder is to be delivered. Such Exercise
Agreement shall be dated the actual date of execution thereof.
2. ADJUSTMENT OF EXERCISE PRICE. The Exercise Price shall be subject to
adjustment from time to time as provided in this Section 2.
2.1 Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of shares of Common
Stock obtainable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time combines (by reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of shares of
Common Stock obtainable upon exercise of this Warrant shall be proportionately
decreased.
2.2 Reorganization, Reclassification, Consolidation, Merger or Sale.
Prior to
the consummation of any Organic Change, the Company shall make appropriate
provision (in form and substance reasonably satisfactory to the Registered
Holder) to ensure that the Registered Holder shall thereafter have the right to
acquire and receive, in lieu of or in addition to (as the case may be) the
shares of Common Stock immediately theretofore acquirable and receivable upon
the exercise of this Warrant, such shares of stock, securities or assets as may
be issued or payable with respect to or in exchange for the number of shares of
Common Stock immediately theretofore acquirable and receivable upon exercise of
this Warrant had such Organic Change not
3.
taken place. In any such case, the Company shall make appropriate provision (in
form and substance reasonably satisfactory to the Registered Holder) with
respect to such holder's rights and interests to ensure that the provisions of
this Section 2 and Section 3 hereof shall thereafter be applicable to this
Warrant. The Company shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor entity in the Organic
Change (if other than the Company) resulting from consolidation or merger or the
entity purchasing such assets assumes by written instrument (in form and
substance reasonably satisfactory to the Registered Holder) the obligation to
deliver to such holder such shares of stock, securities or assets as the
Registered Holder many be entitled to acquire in accordance with the foregoing
provisions.
2.3 Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such provisions,
then the Company's board of directors shall make an appropriate adjustment in
the Exercise Price and the number of shares of Common Stock obtainable upon
exercise of this Warrant so as to protect the rights of the holders of the
Warrants; provided that no such adjustment shall increase the Exercise Price or
decrease the number of shares of Common Stock obtainable as otherwise determined
pursuant to this Section 2.
2.4 Fractional Shares. If, upon exercise of the rights represented by
this Warrant, a fractional share of Common Stock would be issuable by virtue of
the provisions of this Section 2, in lieu of issuing such Fractional Share, the
Company shall, within 5 business days after the date of the Exercise Time,
deliver to the Purchaser the Company's check payable to the Purchaser's order in
an amount equal to the difference between the Average Closing Price of such
fractional share as of the date of the Exercise Time and the Exercise Price of
such additional share.
2.5 Notices.
(a) Immediately upon any adjustment of the Exercise Price or the
number of shares issuable upon exercise of this Warrant, the Company shall give
written notice thereof to the Registered Holder, setting forth in reasonable
detail and certifying the calculation of such adjustment.
(b) The Company shall give written notice to the Registered Holder
at least 20 days (or, if 20 days notice is not practicable, such notice as is
practicable under the circumstances, but in not less than 10 days notice) prior
to the date on which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the Common Stock, (B) with respect
to any pro rata subscription offer to holders of Common Stock or (C) for
determining rights to vote with respect to any Organic Change, dissolution or
liquidation.
(c) The Company shall also give written notice to the Registered
Holders at least 20 days (or, if 20 days notice is not practicable, such notice
as is practicable under the circumstances, but in not less than 10 days notice)
prior to the date on which any Organic Change, dissolution or liquidation shall
take place.
4.
3. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained
in this Warrant shall be construed as conferring upon the Registered Holder
hereof the right to vote or to consent or to receive notice as a stockholder of
the Company or any other matters or any rights whatsoever as a stockholder of
the Company. No dividends or interest shall be payable or accrued in respect of
this Warrant or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the
Registered Holder to purchase shares of Common Stock, and no mere enumeration
herein of the rights or privileges of the Registered Holder hereof, shall give
rise to any liability of such Registered Holder for the Aggregate Exercise Price
or as a stockholder of the Company, whether such liability is asserted by the
Company or by its creditors.
4. DEFINITIONS. THE FOLLOWING TERMS USED IN THIS WARRANT HAVE MEANINGS SET
FORTH BELOW:
An "Affiliate" of a person (as defined below) means any person which,
directly or indirectly, controls, is controlled by or is under common control
with such person. As used in this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
policies and management of a person, whether by ownership of stock, by contract
or otherwise.
"Average Closing Price" means, as to the Common Stock, the average of the
closing sales prices as reported by the National Association of Securities
Dealers, Inc. electronic interdealer quotation system ("Nasdaq") on the Nasdaq
SmallCap Market or the Nasdaq National Market System or on such other domestic
securities exchange on which the Common Stock may then be listed, as applicable,
or, if on any day the Common Stock is not quoted in the Nasdaq National Market
System or the Nasdaq SmallCap Market or listed on any domestic securities
exchange, the average of the highest bid and lowest asked prices on such day in
the domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization, in each such case
for the twenty (20) trading days immediately preceding the date of the Exercise
Time. If at the Exercise Time the Common Stock is not listed on any domestic
securities exchange or quoted in the Nasdaq National Market System, the Nasdaq
SmallCap Market or the domestic over-the-counter market, the "Average Closing
Price" shall be the fair value thereof determined in good faith by the Company's
Board of Directors; provided that if Purchaser in good faith disagrees with such
valuation, such fair value shall be determined by an investment banker jointly
selected by the Company and the Purchaser. The determination of such investment
banker shall be final and binding on the Company and the Investor, and the fees
and expenses of such appraiser shall be shared equally by the Company and the
Purchaser.
"Common Stock" means the Company's Common Stock, $.02 par value per share.
"Organic Change" means any recapitalization, reorganization,
reclassification, Sale of the Company or other transaction, in each case, which
is effected in such a way that the holders
5.
of Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets (other than cash) with respect to or in
exchange for Common Stock.
"Person" means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
"Public Offering" means any offering by the Company of its securities to
the public pursuant to an effective registration statement under the Securities
Act.
"Sale of the Company" means one or more of the following effected in a
single transaction or series of transactions, whether or not related, with one
or more Persons:
(a) The sale or other disposition of all or substantially all of the
Company's assets or the assets of the Company's subsidiaries, on a consolidated
basis;
(b) The sale or other disposition of a majority of the issued and
outstanding equity securities of the Company or other rights giving such Person
or Persons the power to elect a majority of the Company's board of directors
(whether by merger, consolidation or issuance, sale or transfer of equity
securities of the Company); or
(c) The merger or consolidation of the Company or substantially all
of its subsidiaries with one or more third parties in a transaction in which
such third party(ies) or the holders of their equity securities thereafter
control, directly or indirectly, the business and affairs of the Company or the
subsidiaries party to such transaction.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder, all as the same shall be in effect at the time.
Other capitalized terms used in this Warrant but not defined herein shall
have the meanings set forth in the Securities Purchase Agreement of even date
herewith by and between the Company and Fresenius Aktiengesellschaft (the
"Purchase Agreement").
5. NO VOTING RIGHTS; LIMITATIONS OF LIABILITY. This Warrant shall not entitle
the holder hereof to any voting rights or other rights as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the
Registered Holder to purchase Common Stock, and no enumeration herein of the
rights or privileges of the Registered Holder, shall give rise to any liability
of such holder for the Exercise Price of Common Stock acquirable by exercise
hereof or as a stockholder of the Company.
6. WARRANT TRANSFERABLE. Subject to compliance with applicable federal and
state security laws, this Warrant and all rights hereunder are transferable to
any Affiliate of the Registered Holder, in whole or in part, without charge to
the Registered Holder (except for transfer taxes), upon surrender of this
Warrant with a properly executed Assignment (in the form of Exhibit II hereto)
at the principal office of the Company. This Warrant and all rights
6.
hereunder may also be transferred to an underwriter in connection with an
underwritten offering of the Common Stock issuable upon exercise of this Warrant
if such Common Stock is to be sold in an underwritten offering pursuant to the
Registration Agreement of even date herewith between the Purchaser and the
Company. This Warrant is otherwise non-negotiable and may not be transferred or
assigned without the prior written consent of the Company, which consent may be
withheld in its sole discretion.
7. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is
exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
8. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the
Company (an affidavit of the Registered Holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of the Registered Holder's indemnity agreement or, in the case of
any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen,
destroyed or mutilated certificate.
9. NOTICES. Except as otherwise expressly provided herein, all notices
referred to in this Warrant shall be in writing and shall be delivered
personally, sent by reputable overnight courier service (charges prepaid) or
sent by registered or certified mail, return receipt requested, postage prepaid
and shall be deemed to have been given when so delivered, sent or deposited in
the U.S. Mail (i) to the Company, at its principal executive offices and (ii) to
the Registered Holder of this Warrant, at such holder's address as it appears in
the records of the Company (unless otherwise indicated by such holder).
10. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions
of the Warrants may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the Registered Holder.
11. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive headings of the
several Sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. All issues and questions
concerning the construction, validity, enforcement and interpretation of this
Warrant shall be governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction)
that would
7.
cause the application of the domestic substantive laws of any jurisdiction other
than the State of Delaware.
12. ARBITRATION. Any dispute or controversy arising out of or in connection
with this warrant (a "Dispute"), including any dispute relating to the
existence, materiality or cure of a claimed material breach, shall be governed
by the provisions of Article IX of the Purchase Agreement.
13. ATTORNEYS' FEES. In any action at law or in equity to enforce any of the
provisions or rights under this Warrant, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and expenses incurred in such action, in
addition to any other relief to which such party shall be entitled.
8.
IN WITNESS Whereof, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
CYPRESS BIOSCIENCE, INC.:
By: /s/ Jay D. Kranzler
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Its: Chief Executive Officer
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[Corporate Seal]
Attest:
- -------------------------------
Title: _______________________
9.
EXHIBIT I
EXERCISE AGREEMENT
To: Cypress Bioscience, Inc.
Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant, hereby agrees to subscribe for the purchase of ___________ shares of
the Common Stock covered by such Warrant and makes payment herewith in full
therefor at the price per share provided by such Warrant.
Payment shall be made by delivery of $________ transmitted herewith by
check.
Signature _____________________
Address _______________________
Exh. II-1
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _____________________________, pursuant to Section 6 of
the Common Stock Purchase Warrant, hereby sells, assigns and transfers all of
the rights of the undersigned under the attached Warrant (Certificate No. [ ])
with respect to the number of shares of the Common Stock covered thereby set
forth below, unto:
NAMES OF ASSIGNEE/AFFILIATE
___________________________
ADDRESS
___________________________
___________________________
NO. OF SHARES
___________________________
Signature ______________________
______________________
Witness ______________________
2.