EXHIBIT 4.9
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR OTHERWISE. THIS CALL WARRANT SHALL NOT
CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE
SECURITIES ARE "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS
PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
CALL WARRANT
No. [__]
To Receive Units of
PHARMOS CORPORATION
THIS CERTIFIES that, for value received, [__________________] (the
"Investor") is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time on or after the date hereof and on or prior
to 5:00 p.m. New York City Time on September 1, 2001 (the "Termination Date"),
but not thereafter, in not more than two (2) transactions of at least $1,000,000
each to subscribe for and purchase from PHARMOS CORPORATION, a Nevada
corporation (the "Company"), Units (as defined below) having an aggregate value
of up to $2,000,000, as calculated pursuant to this Call Warrant. The "Exercise
Price" is as provided in Section 3(b) below. The "Units" shall consist of that
number of shares of Common Stock (the "Optional Shares") and such number of
warrants in the form annexed hereto as Exhibit 3 (the "Optional Adjustment
Warrants") as shall be calculated pursuant to Section 3(c). The Exercise Price
and the number of shares for which the Call Warrant is exercisable shall be
subject to adjustment as provided herein. This Call Warrant is being issued in
connection with the Common Stock Investment Agreement dated September 1, 2000
(the "Agreement") entered into between the Company and the Investor.
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1. Title of Call Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Call Warrant and all rights hereunder
are transferable, in whole or in respect of the right to purchase any part
of the Units, at the office or agency of the Company by the holder hereof
in person or by duly authorized attorney, upon surrender of this Call
Warrant together with (a) the Assignment Form annexed hereto as Exhibit 2
properly endorsed, and (b) any other documentation reasonably necessary to
satisfy the Company that such transfer is in compliance with all applicable
securities laws.
2. Authorization of Shares. The Company covenants that all shares of Common
Stock which may be issued upon the exercise of rights represented by this
Call Warrant will, upon exercise of the rights represented by this Call
Warrant and payment of the Exercise Price as set forth herein will be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such issue or
otherwise specified herein).
3. Exercise of Call Warrant.
(a) The Investors have the option but not the obligation, by delivering one or
more written notices of exercise in the form annexed hereto as Exhibit 1
(each a "Notice") to the Company at any time up to and including the
Termination Date, to purchase in no more than two (2) transactions of not
less than $1,000,000 each, up to $2,000,000 worth of Units as provided in
this Section 3. The date of such Notice shall be deemed the "Notice Date."
(b) Prerequisite. The Investor may only deliver a Notice if the average closing
bid price of a share of Common Stock on the Principal Market for the five
(5) Trading Days immediately preceding but not including the applicable
Notice Date exceeds the Share Purchase Price, such average being the
"Exercise Price."
(c) Calculations and Closing. The Notice shall specify the dollar value of
Units the Investor wishes to purchase (the "Notice Amount"). At 10:00 a.m.
on the third (3rd) Trading Day following the Notice Date, the Company will
deliver to the Investor, at the offices of KKWC, Units consisting of (i)
the number of Optional Shares determined by dividing the Notice Amount by
the applicable Exercise Price, and (ii) Optional Adjustment Warrants
covering such Optional Shares. The Optional Adjustment Warrants shall be
substantially in the form of Exhibit 3 hereto. At such closing (each, an
"Optional Closing"), the Investor will deliver to the Company the
applicable Notice Amount, whereupon it will be deemed the record and
beneficial owner of all the applicable Units as of the Notice Date.
(d) Alternatively, the Call Warrant holder may but shall not be required to
exercise this Call Warrant, in whole or in part in a "cashless" or
"net-issue" exercise by delivering to the offices of the Company or any
transfer agent for the Common Stock this Call Warrant, together with a
Notice specifying the number of Units to be delivered to such Call Warrant
holder ("Deliverable Units") and the number of shares of Common Stock with
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respect to which this Call Warrant is being surrendered in payment of the
aggregate Exercise Price for the Deliverable Units ("Surrendered Shares").
The number of Deliverable Units shall be calculated as follows:
<TABLE>
<S> <C>
# of Deliverable Units = # of Surrendered Shares x Fair Market Value of Common Stock less Exercise Price
-----------------------------------------------------
Fair Market Value of Common Stock
</TABLE>
"Fair Market Value" shall have the meaning specified in Section 12(c)
In the event that the Call Warrant is not exercised in full, the number of
Units shall be reduced by the number of such Units for which this Call
Warrant is exercised and/or surrendered, and the Company, at its expense,
shall within three (3) Trading Days issue and deliver to or upon the order
of the Call Warrant holder a new Call Warrant of like tenor in the name of
Call Warrant holder or as Call Warrant holder (upon payment by Call Warrant
holder of any applicable transfer taxes) may request, reflecting such
adjusted Units.
All exercises will be deemed to occur as of the date of the Notice, and
certificates for Units purchased hereunder shall be delivered to the holder
hereof within three (3) Trading Days after the date on which this Call
Warrant shall have been exercised as aforesaid. The Call Warrant holder may
withdraw its Notice at any time thereafter if the Company fails to timely
deliver the applicable certificates to the Call Warrant holder as provided
in this Call Warrant.
(e) In lieu of delivering physical certificates representing the Common Stock
issuable upon exercise, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Call Warrant
holder, the Company shall use its best efforts to cause its transfer agent
to electronically transmit the Common Stock issuable upon exercise to the
Call Warrant holder by crediting the account of Call Warrant holder's prime
broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC")
system. The time periods for delivery described in the immediately
preceding paragraph shall apply to the electronic transmittals described
herein.
The term "Trading Day" means (x) if the Common Stock is listed on the New
York Stock Exchange or the American Stock Exchange, a day on which there is
trading on such stock exchange, or (y) if the Common Stock is not listed on
either of such stock exchanges but sale prices of the Common Stock are
reported on an automated quotation system, a day on which trading is
reported on the principal automated quotation system on which sales of the
Common Stock are reported, or (z) if the foregoing provisions are
inapplicable, a day on which quotations are reported by National Quotation
Bureau Incorporated.
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4. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Call Warrant.
5. Charges, Taxes and Expenses. Issuance of certificates for Units upon the
exercise of this Call Warrant shall be made without charge to the holder
hereof for any issue or transfer tax or other incidental expense in respect
of the issuance of such certificate, all of which taxes and expenses shall
be paid by the Company, and such certificates shall be issued in the name
of the holder of this Call Warrant or in such name or names as may be
directed by the holder of this Call Warrant; provided, however, that in the
event certificates for Units are to be issued in a name other than the name
of the holder of this Call Warrant, this Call Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof; and provided further, that the Company shall
not be required to pay any tax or taxes which may be payable in respect of
any transfer involved in the issuance of any Call Warrant certificates or
any certificates for the Units other than the issuance of a Call Warrant
Certificate to the Investor in connection with the Investor's surrender of
a Call Warrant Certificate upon the exercise of less than all of the Call
Warrants evidenced thereby, 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.
6. Closing of Books. The Company will at no time close its shareholder books
or records in any manner which interferes with the timely exercise of this
Call Warrant.
7. No Rights as Shareholder until Exercise. Subject to Section 12 of this Call
Warrant and the provisions of any other written agreement between the
Company and the Investor, the Investor shall not be entitled to vote or
receive dividends or be deemed the holder of Optional Shares or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Investor, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of
par value, or change of stock to no par value, consolidation, merger,
conveyance or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until the Call Warrant shall
have been exercised as provided herein. However, at the time of the
exercise of this Call Warrant pursuant to Section 3 hereof, the Units so
purchased hereunder shall be deemed to be issued to such holder as the
record owner of such shares as of the close of business on the date on
which this Call Warrant shall have been exercised.
8. Assignment and Transfer of Call Warrant. This Call Warrant may be assigned
in whole or in part by the surrender of this Call Warrant and the
Assignment Form annexed hereto duly executed at the office of the Company
(or such other office or agency of the Company as it may designate by
notice in writing to the registered holder hereof at the
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address of such holder appearing on the books of the Company); provided,
however, that this Call Warrant may not be resold or otherwise transferred
except (i) in a transaction registered under the Securities Act of 1933, as
amended (the "Act"), or (ii) in a transaction pursuant to an exemption, if
available, from registration under the Act and whereby, if requested by the
Company, an opinion of counsel reasonably satisfactory to the Company is
obtained by the holder of this Call Warrant to the effect that the
transaction is so exempt.
9. Loss, Theft, Destruction or Mutilation of Call Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Call Warrant or certificates representing
the Units, and in case of loss, theft or destruction, of indemnity
reasonably satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto. Upon surrender and cancellation of
such Call Warrant or Units, if mutilated, the Company will make and deliver
a new Call Warrant or Units of like tenor and dated as of such
cancellation, in lieu of this Call Warrant or Units.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may
be taken or such right may be exercised on the next succeeding day not a
legal holiday.
11. Effect of Certain Events. If at any time while this Call Warrant or any
portion thereof is outstanding and unexpired there shall be (i) a sale or
conveyance of all or substantially all of the Company's assets or (ii) a
transaction (by merger or otherwise) in which more than 50% of the voting
power of the Company is disposed of (collectively, a "Sale or Merger
Transaction"), in which the consideration to be received by the Company or
its shareholders consists solely of cash, and in case the Company shall at
any time effect a Sale or Merger Transaction in which the consideration to
be received by the Company or its shareholders consists in part of
consideration other than cash, the holder of this Call Warrant shall have
the right thereafter to purchase, by exercise of this Call Warrant and
payment of the aggregate Exercise Price in effect immediately prior to such
action, the kind and amount of shares and other securities and property
which it would have owned or have been entitled to receive after the
happening of such transaction had this Call Warrant been exercised
immediately prior thereto, subject to further adjustment as provided in
Section 12. Notwithstanding the above, a Sale or Merger Transaction shall
not be deemed to occur in the event the Company is the acquiring entity in
connection with an acquisition by the Company.
12. Adjustments of Exercise Price and Number of Units.
The number of and kind of securities purchasable upon exercise of this Call
Warrant and the Exercise Price shall be subject to adjustment from time to
time as follows:
(a) Subdivisions, Combinations and other Issuances. If the Company shall at any
time after the date hereof but prior to the expiration of this Call Warrant
subdivide its outstanding
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securities as to which purchase rights under this Call Warrant exist, by
split-up, spin-off, or otherwise, or combine its outstanding securities as
to which purchase rights under this Call Warrant exist, the number of
Optional Shares as to which this Call Warrant is exercisable as of the date
of such subdivision, split-up, spin-off or combination shall forthwith be
proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate proportional
adjustments (decrease in the case of subdivision, increase in the case of
combination) shall also be made to the Exercise Price payable per share, so
that the aggregate Exercise Price payable for the total number of Optional
Shares purchasable under this Call Warrant as of such date shall remain the
same as it would have been before such subdivision or combination.
(b) Stock Dividend. If at any time after the date hereof the Company declares a
dividend or other distribution on Common Stock payable in Common Stock or
other securities or rights convertible into Common Stock ("Common Stock
Equivalents") without payment of any consideration by holders of Common
Stock for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
exercise or conversion thereof), then the number of shares of Common Stock
for which this Call Warrant may be exercised shall be increased as of the
record date (or the date of such dividend distribution if no record date is
set) for determining which holders of Common Stock shall be entitled to
receive such dividends, in proportion to the increase in the number of
outstanding shares (and shares of Common Stock issuable upon conversion of
all such securities convertible into Common Stock) of Common Stock as a
result of such dividend, and the Exercise Price shall be proportionately
reduced so that the aggregate Exercise Price for all the Optional Shares
issuable hereunder immediately after the record date (or on the date of
such distribution, if applicable), for such dividend shall equal the
aggregate Exercise Price so payable immediately before such record date (or
on the date of such distribution, if applicable).
(c) Other Distributions. If at any time after the date hereof the Company
distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any shares of
its capital stock, any evidence of indebtedness or any of its assets (other
than Common Stock), then the number of Optional Shares for which this Call
Warrant is exercisable shall be increased to equal: (i) the number of Call
Warrant Shares for which this Call Warrant is exercisable immediately prior
to such event, (ii) multiplied by a fraction, (A) the numerator of which
shall be the Fair Market Value (as defined below) per share of Common Stock
on the record date for the dividend or distribution, and (B) the
denominator of which shall be the Fair Market Value price per share of
Common Stock on the record date for the dividend or distribution minus the
amount allocable to one share of Common Stock of the value (as jointly
determined in good faith by the Board of Directors of the Company and the
Call Warrant holder) of any and all such evidences of indebtedness, shares
of capital stock, other securities or property, so distributed. For
purposes of this Call Warrant, "Fair Market Value" shall equal the 10
Trading Day average closing trading price of the Common Stock on the
Principal Market for the 10 Trading Days preceding the date of
determination or, if the Common Stock is not listed or admitted to trading
on any Principal Market, the average
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of the closing bid and asked prices on the over-the-counter market as
furnished by any New York Stock Exchange member firm reasonably selected
from time to time by the Company for that purpose and reasonably acceptable
to the Holder, or, if the Common Stock is not listed or admitted to trading
on the Principal Market or traded over-the-counter and the average price
cannot be determined as contemplated above, the Fair Market Value of the
Common Stock shall be as reasonably determined in good faith by the
Company's Board of Directors with the concurrence of the Holder. The
Exercise Price shall be reduced to equal: (i) the Exercise Price in effect
immediately before the occurrence of any event (ii) multiplied by a
fraction, (A) the numerator of which is the number of Optional Shares for
which this Call Warrant is exercisable immediately before the adjustment,
and (B) the denominator of which is the number of Optional Shares for which
this Call Warrant is exercisable immediately after the adjustment.
(d) Merger, etc. If at any time after the date hereof there shall be a merger
or consolidation of the Company with or into or a transfer of all or
substantially all of the assets of the Company to another entity, then the
Call Warrant holder shall be entitled to receive upon or after such
transfer, merger or consolidation becoming effective, and upon payment of
the Exercise Price then in effect, the number of shares or other securities
or property of the Company or of the successor corporation resulting from
such merger or consolidation, which would have been received by Call
Warrant holder for the shares of stock subject to this Call Warrant had
this Call Warrant been exercised just prior to such transfer, merger or
consolidation becoming effective or to the applicable record date thereof,
as the case may be. The Company will not merge or consolidate with or into
any other corporation, or sell or otherwise transfer its property, assets
and business substantially as an entirety to another corporation, unless
the corporation resulting from such merger or consolidation (if not the
Company), or such transferee corporation, as the case may be, shall
expressly assume in writing the due and punctual performance and observance
of each and every covenant and condition of this Call Warrant to be
performed and observed by the Company.
(e) Reclassification, etc. If at any time after the date hereof there shall be
a reorganization or reclassification of the securities as to which purchase
rights under this Call Warrant exist into the same or a different number of
securities of any other class or classes, then the Call Warrant holder
shall thereafter be entitled to receive upon exercise of this Call Warrant,
during the period specified herein and upon payment of the Exercise Price
then in effect, the number of shares or other securities or property
resulting from such reorganization or reclassification, which would have
been received by the Call Warrant holder for the shares of stock subject to
this Call Warrant had this Call Warrant at such time been exercised.
(f) Exercise Price Adjustment. In the event that the Company issues or sells
any Common Stock or securities which are convertible into or exchangeable
for its Common Stock or any convertible securities, or any Call Warrants or
other rights to subscribe for or to purchase or any options for the
purchase of its Common Stock or any such convertible securities (other than
shares or options issued or which may be issued pursuant to (i) the
Company's current
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or future employee, director or bona fide consultant option plans or shares
issued upon exercise of options, Call Warrants or rights outstanding on the
date of the Agreement and listed in the Company's most recent periodic
report filed under the Exchange Act (ii) strategic corporate alliances not
undertaken principally for financing purposes, (iii) arrangements with the
Investor, or (iv) acquisitions of other entities by the Company) at an
effective Exercise Price per share which is less than the Exercise Price
then in effect of the Common Stock on the trading day next preceding such
issue or sale, then the Exercise Price in effect immediately prior to such
issue or sale shall be reduced effective concurrently with such issue or
sale to an amount determined by multiplying the Exercise Price then in
effect by a fraction, (x) the numerator of which shall be the sum of (1)
the number of shares of Common Stock outstanding immediately prior to such
issue or sale, plus (2) the number of shares of Common Stock which the
aggregate consideration received by the Company for such additional shares
would purchase at such Exercise Price then in effect; and (y) the
denominator of which shall be the number of shares of Common Stock of the
Company outstanding immediately after such issue or sale.
For the purposes of the foregoing adjustment, in the case of the issuance
of any convertible securities, Call Warrants, options or other rights to
subscribe for or to purchase or exchange for, shares of Common Stock
("Convertible Securities"), the maximum number of shares of Common Stock
issuable upon exercise, exchange or conversion of such Convertible
Securities shall be deemed to be outstanding, provided that no further
adjustment shall be made upon the actual issuance of Common Stock upon
exercise, exchange or conversion of such Convertible Securities.
The number of shares which may be purchased hereunder shall be increased
proportionately to any reduction in Exercise Price pursuant to this
paragraph 12(f), so that after such adjustments the aggregate Exercise
Price payable hereunder for the increased number of shares shall be the
same as the aggregate Exercise Price in effect just prior to such
adjustments.
13. Voluntary Adjustment by the Company. The Company may at its option, at any
time during the term of this Call Warrant, reduce but not increase the then
current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company.
14. Notice of Adjustment. Whenever the number of Units or number or kind of
securities or other property purchasable upon the exercise of this Call
Warrant or the Exercise Price is adjusted, the Company shall promptly mail
to the holder of this Call Warrant a notice setting forth the number of
Units (and other securities or property) purchasable upon the exercise of
this Call Warrant and the Exercise Price of such Units after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
15. Authorized Shares. The Company covenants that during the period the Call
Warrant is outstanding and exercisable, it will reserve from its authorized
and unissued Common Stock a sufficient number of shares to provide for the
issuance and exercise of the Units
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upon the exercise of any purchase rights under this Call Warrant. The
Company further covenants that its issuance of this Call Warrant shall
constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary
certificates for the Units upon the exercise of the purchase rights under
this Call Warrant. The Company will take all such reasonable action as may
be necessary to assure that such Units may be issued and exercised as
provided herein without violation of any applicable law or regulation, or
of any requirements of the American Stock Exchange or any domestic
securities exchange upon which the Common Stock may be listed.
16. 9/9% Limitation.
(a) Notwithstanding anything to the contrary contained herein, the number of
shares of Common Stock that may be acquired by the Investor upon exercise
pursuant to the terms hereof shall not exceed a number that, when added to
the total number of shares of Common Stock deemed beneficially owned by
such holder (other than by virtue of the ownership of securities or rights
to acquire securities (including the Call Warrant) that have limitations on
the Investor's right to convert, exercise or purchase similar to the
limitation set forth herein), together with all shares of Common Stock
deemed beneficially owned (other than by virtue of the ownership of
securities or rights to acquire securities that have limitations on the
right to convert, exercise or purchase similar to the limitation set forth
herein) by the holder's "affiliates" (as defined Rule 144 of the Act)
("Aggregation Parties") that would be aggregated for purposes of
determining whether a group under Section 13(d) of the Securities Exchange
Act of 1934, as amended, exists, would exceed 9.99% of the total issued and
outstanding shares of the Company's Common Stock (the "Restricted Ownership
Percentage"). Each holder shall have the right (w) at any time and from
time to time to reduce its Restricted Ownership Percentage immediately upon
notice to the Company and (x) at any time and from time to time, to
increase its Restricted Ownership Percentage immediately in the event of
the announcement as pending or planned of an event of:
(i) any consolidation or merger of the Company with or into any other
corporation or other entity or person (whether or not the Company is
the surviving corporation), or any other corporate reorganization or
transaction or series of related transactions in which in excess of
50% of the Company's voting power is transferred through a merger,
consolidation, tender offer or similar transaction,
(ii) any person (as defined in Section 13(d) of the Exchange Act), together
with its affiliates and associates (as such terms are defined in Rule
405 under the 1933 Act), beneficially owns or is deemed to
beneficially own (as described in Rule 13d-3 under the Exchange Act
without regard to the 60-day exercise period) in excess of 50% of the
Company's voting power,
(iii)there is a replacement of more than one-half of the members of the
Company's Board of Directors which is not approved by those
individuals who are members
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of the Company's Board of Directors on the date thereof, in one or a
series of related transactions, or
(iv) a sale or transfer of all or substantially all of the assets of the
Company, determined on a consolidated basis.
(b) The Investor covenants at all times on each day (each such day being
referred to as a "Covenant Day") as follows: During the balance of such
Covenant Day and the succeeding sixty-one (61) days (the balance of such
Covenant Day and the succeeding 61 days being referred to as the "Covenant
Period") such Investor will not acquire shares of Common Stock pursuant to
any right (including the exercise of the Call Warrant) existing at the
commencement of the Covenant Period to the extent the number of shares so
acquired by such holder and its Aggregation Parties (ignoring all
dispositions) would exceed:
(x) the Restricted Ownership Percentage of the total number of shares of
Common Stock outstanding at the commencement of the Covenant Period,
minus
(y) the number of shares of Common Stock owned by such holder and its
Aggregation Parties at the commencement of the Covenant Period.
A new and independent covenant will be deemed to be given by the
holder as of each moment of each Covenant Day. No covenant will terminate,
diminish or modify any other covenant. The holder agrees to comply with
each such covenant. This Section 16 controls in the case of any conflict
with any other provision of the Transaction Documents.
The Company's obligation to issue shares of Common Stock which would
exceed such limits referred to in this Section 16 shall be suspended to the
extent necessary until such time, if any, as shares of Common Stock may be
issued in compliance with such restrictions.
17. Compliance with Securities Laws.
(a) The holder hereof acknowledges that the Units acquired upon the exercise of
this Call Warrant, if not registered (or if no exemption from registration
exists), will have restrictions upon resale imposed by state and federal
securities laws. Each certificate representing the Units issued to the
holder upon exercise (if not registered or if no exemption from
registration exists) will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS
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AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS, BASED ON AN OPINION LETTER OF COUNSEL SATISFACTORY TO THE
COMPANY OR A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
(b) Without limiting the Investor's right to transfer, assign or otherwise
convey the Call Warrant or Units in compliance with all applicable
securities laws, the Investor of this Call Warrant, by acceptance hereof,
acknowledges that this Call Warrant and the Units to be issued upon
exercise hereof are being acquired solely for the Investor's own account
and not as a nominee for any other party, and that the Investor will not
offer, sell or otherwise dispose of this Call Warrant or any Units to be
issued upon exercise hereof except under circumstances that will not result
in a violation of applicable federal and state securities laws. Upon
exercise of this Call Warrant, the Investor shall, if requested by the
Company, confirm in writing, in a form satisfactory to the Company, that
the Units of Common Stock so purchased are being acquired solely for the
Investor's own account and not as a nominee for any other party, for
investment, and not with a view toward distribution or resale.
(c) Neither this Call Warrant nor any share of Common Stock issued upon
exercise of this Call Warrant may be offered for sale or sold, or otherwise
transferred or sold in any transaction which would constitute a sale
thereof within the meaning of the Act, unless (i) such security has been
registered for sale under the Act and registered or qualified under
applicable state securities laws relating to the offer an sale of
securities, or (ii) exemptions from the registration requirements of the
Act and the registration or qualification requirements of all such state
securities laws are available and the Company shall have received an
opinion of counsel that the proposed sale or other disposition of such
securities may be effected without registration under the Act, such counsel
and such opinion to be satisfactory to the Company.
(d) Investor recognizes that investing in the Call Warrant and the Units
involves a high degree of risk, and Investor is in a financial position to
hold the Call Warrant and the Call Warrant Shares indefinitely and is able
to bear the economic risk and withstand a complete loss of its investment
in the Call Warrant and the Units. The Investor is a sophisticated investor
and is capable of evaluating the merits and risks of investing in the
Company. The Investor has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management,
has been given full and complete access to information concerning the
Company, and has utilized such access to its satisfaction for the purpose
of obtaining information or verifying information and have had the
opportunity to inspect the Company's operation. Investor has had the
opportunity to ask questions of, and receive answers from, the management
of the
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Company (and any person acting on its behalf) concerning the Call Warrant
and the Units and the agreements and transactions contemplated hereby, and
to obtain any additional information as Investor may have requested in
making its investment decision. The initial Investor in this Call Warrant
is an "accredited investor", as defined by Regulation D promulgated under
the Act.
18. Miscellaneous.
(a) Issue Date; Choice Of Law; Venue; Jurisdiction. THE PROVISIONS OF THIS CALL
WARRANT SHALL BE CONSTRUED AND SHALL BE GIVEN EFFECT IN ALL RESPECTS AS IF
IT HAD BEEN ISSUED AND DELIVERED BY THE COMPANY ON THE DATE HEREOF. THIS
CALL WARRANT SHALL BE BINDING UPON ANY SUCCESSORS OR ASSIGNS OF THE
COMPANY. THIS CALL WARRANT WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT FOR MATTERS
ARISING UNDER THE ACT, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW.
EACH OF THE PARTIES CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE U.S.
DISTRICT COURT SITTING IN THE STATE OF CITY OF NEW YORK IN THE STATE OF NEW
YORK IN CONNECTION WITH ANY DISPUTE ARISING UNDER THIS CALL WARRANT AND
HEREBY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION,
INCLUDING ANY OBJECTION BASED ON FORUM NON CONVENIENS, TO THE BRINGING OF
ANY SUCH PROCEEDING IN SUCH JURISDICTION. EACH PARTY HEREBY AGREES THAT IF
THE OTHER PARTY TO THIS CALL WARRANT OBTAINS A JUDGMENT AGAINST IT IN SUCH
A PROCEEDING, THE PARTY WHICH OBTAINED SUCH JUDGMENT MAY ENFORCE SAME BY
SUMMARY JUDGMENT IN THE COURTS OF ANY COUNTRY HAVING JURISDICTION OVER THE
PARTY AGAINST WHOM SUCH JUDGMENT WAS OBTAINED, AND EACH PARTY HEREBY WAIVES
ANY DEFENSES AVAILABLE TO IT UNDER LOCAL LAW AND AGREES TO THE ENFORCEMENT
OF SUCH A JUDGMENT. EACH PARTY TO THIS CALL WARRANT IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS IN ANY SUCH PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT
ITS ADDRESS IN ACCORDANCE WITH SECTION 18(C). NOTHING HEREIN SHALL AFFECT
THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW. EACH PARTY WAIVES ITS RIGHT TO A TRIAL BY JURY.
(b) Modification and Waiver. This Call Warrant and any provisions hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought. Any
amendment effected in accordance with this paragraph shall be binding upon
the Investor, each future holder of this Call Warrant and the Company. No
waivers of, or exceptions to, any term, condition
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or provision of this Call Warrant, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such
term, condition or provision.
(c) Notices. Any notice, request or other document required or permitted to be
given or delivered to the Investor or future holders hereof or the Company
shall be personally delivered or shall be sent by certified or registered
mail, postage prepaid, to the Investor or each such holder at its address
as shown on the books of the Company or to the Company at the address set
forth in the Agreement. All notices under this Call Warrant shall be deemed
to have been given when received.
A party may from time to time change the address to which notices to it are
to be delivered or mailed hereunder by notice in accordance with the
provisions of this Section 18(c).
(d) Severability. Whenever possible, each provision of this Call Warrant shall
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Call Warrant is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of any other provision of
this Call Warrant in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Call
Warrant shall be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision had never been
contained herein.
(e) No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Call Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of the Call Warrant Holder against impairment. Without
limiting the generality of the foregoing, the Company (a) will not increase
the par value of any Call Warrant Shares above the amount payable therefor
on such exercise, and (b) will take all such action as may be reasonably
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable Units on the exercise of this Call
Warrant.
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IN WITNESS WHEREOF, the Company has caused this Call Warrant to be executed
by its officers thereunto duly authorized.
Dated: September 1, 2000
PHARMOS CORPORATION
By: ______________________________
Name:
Title:
Agreed and Accepted
this 1st day of September, 2000
[________________________]
By:___________________________
Name:
Title:
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Exhibit 1
NOTICE
To: PHARMOS CORPORATION
(1) The undersigned hereby elects:
(A) to purchase ________ shares of Common Stock of Pharmos Corporation
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the Exercise Price in full, together with all applicable transfer taxes, if any.
(B) in a "cashless" or "net-issue exercise" for, and to purchase
thereunder, ______ shares of Common Stock, and herewith makes payment therefor
with _______ Surrendered Shares.
(2) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
-------------------------------
(Name)
-------------------------------
(Address)
-------------------------------
(3) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
Other Name: ___________________
------------------------------------------
(Name)
--------------------------- ------------------------------------------
(Date) (Signature)
------------------------------------------
(Address)
<PAGE>
Exhibit 2
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant of Pharmos Corporation and all
rights evidenced thereby are hereby assigned to
_______________________________________________ whose address is
____________________________________________________________________________.
____________________________________________________________________________.
Dated: ______________,
Holder's Signature: ______________________________
Holder's Address: ______________________________
______________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
