<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 9, 1997
REGISTRATION NO. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
CYPRESS BIOSCIENCE, INC.
(Exact name of Registrant as specified in its charter)
----------------------
DELAWARE 22-2389839
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
4350 EXECUTIVE DRIVE, SUITE 325
SAN DIEGO, CALIFORNIA 92121
(619) 452-2323
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
----------------------
WARRANT TO PURCHASE COMMON STOCK
(Full title of the plans)
----------------------
JAY D. KRANZLER
CHIEF EXECUTIVE OFFICER, CHIEF SCIENTIFIC OFFICER
AND VICE CHAIRMAN OF THE BOARD OF DIRECTORS
CYPRESS BIOSCIENCE, INC.
4350 EXECUTIVE DRIVE, SUITE 325
SAN DIEGO, CALIFORNIA 92121
(619) 452-2323
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------
Copies to:
FREDERICK T. MUTO, ESQ.
CARL R. SANCHEZ, ESQ.
COOLEY GODWARD LLP
4365 EXECUTIVE DRIVE, SUITE 1100
SAN DIEGO, CA 92121
(619) 550-6000
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF SECURITIES AMOUNT TO OFFERING PRICE OFFERING AMOUNT OF
TO BE REGISTERED BE REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.02 par value 100,000 $2.00 $200,000 $100
==============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457. The price per share and aggregate
offering price are based upon the actual exercise price for shares subject to
outstanding Warrants to Purchase Common Stock previously granted by Registrant
as compensation for consulting services rendered to the Registrant. The
following chart shows the calculation of the registration fee.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Aggregate
Type of Shares Number of Shares Offering Price Per Share Offering Price
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock issuable pursuant to 100,000 $2.00 $200,000
outstanding common stock purchase
warrants
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Company's Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1995, the Company's Proxy Statement for the 1996 Annual Meeting of
Stockholders filed on March 11, 1996 pursuant to Rule 14a-6 of the Exchange Act,
the Company's Current Report on Form 8-K dated as of January 29, 1996, the
Company's Current Report on Form 8-K dated as of March 8, 1996, the Company's
Current report on Form 8-K dated as of April 1, 1996, the Company's Current
Report on Form 8-K filed on November 18, 1996, the Company's Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and September
30, 1996 and the Company's Registration Statement on Form S-3 (No. 33-71278)
filed on January 7, 1997 filed by the Company with the Commission are hereby
incorporated by reference in this Registration Statement except as superseded or
modified herein. All documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Registration Statement and prior to the time a post-effective amendment
which indicates that securities offered have been sold or which deregisters all
securities then remaining unsold shall be deemed to be incorporated by reference
into this Registration Statement and to be a part hereof from the date of filing
of such documents. Any statement contained in any document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Certificate of Incorporation and Bylaws include provisions
to (i) eliminate the personal liability of its directors for monetary damages
resulting from breaches of their fiduciary duty to the extent permitted by
Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL") and (ii)
require the Registrant to indemnify its directors and officers to the fullest
extent permitted by applicable law, including circumstances in which
indemnification is otherwise discretionary. Pursuant to Section 145 of the
DGCL, a corporation generally has the power to indemnify its present and former
directors, officers, employees and agents against expenses incurred by them in
connection with any suit to which they are or are threatened to be made, a
party by reason of their serving in such positions so long as they acted in
good faith and in a manner they reasonably believed to be in or not opposed to,
the best interests of the corporation and with respect to any criminal action,
they had no reasonable cause to believe their conduct was unlawful. The
Registrant believes that these provisions are necessary to attract and retain
qualified persons as directors and officers. These provisions do not eliminate
the directors' or
<PAGE> 3
officers' duty of care, and, in appropriate circumstances, equitable remedies
such as injunctive or other forms of non-monetary relief will remain available
under the DGCL. In addition, each director will continue to be subject to
liability pursuant to Section 174 of the DGCL, for breach of the director's
duty of loyalty to the Registrant, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for acts or
omissions that the director believes to be contrary to the best interests of
the Registrant or its stockholders, for any transaction from which the director
derived an improper personal benefit, for acts or omissions involving a
reckless disregard for the director's duty to the Registrant or its
stockholders when the director was aware or should have been aware of a risk of
serious injury to the Registrant or its stockholders, for acts or omission that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the Registrant or its stockholders, for improper
transactions between the director and the Registrant and for improper loans to
directors and officers. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities law or
state or federal environmental laws.
The Registrant has entered into a letter agreement with a certain former
executive officer whereby the Registrant has agreed to pay for certain expenses
(including attorney's fees) incurred by such executive officer related to an
inquiry being conducted by the State of Washington's Board of Accountancy in
advance of any final disposition of such inquiry. In the event it is
ultimately determined that such executive officer is not entitled to
indemnification under the terms of the Registrant's Bylaws or other applicable
laws or regulations such executive officer is obligated to repay all amounts
advanced by the Registrant on such executive officer's behalf.
The Registrant has an insurance policy covering the officers and directors of
the Registrant with respect to certain liabilities, including liabilities
arising under the Securities Act or otherwise.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
2
<PAGE> 4
ITEM 8. EXHIBITS.
Exhibit No. Description
- ---------- -----------
4.1 Registrant's Amended and Restated Certificate of Incorporation.(1)
4.2 Registrant's Amended and Restated Bylaws.(2)
4.3 Specimen Stock Certificate.(3)
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Coopers & Lybrand L.L.P., Independent Accountants.
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page 5.
99.1 Form of Warrant to Purchase Common Stock.
_________________________________
(1) Filed as an exhibit to the Registrant's Form 10-Q for the quarter
ended March 31, 1996 filed with the SEC on May 15, 1996, and
incorporated herein by reference.
(2) Filed as an exhibit to the Registrant's Form 10-K for the year ended
December 31, 1995 filed with the SEC on February 19, 1996, and
incorporated herein by reference.
(3) Filed as an exhibit to the Registrant's Registration Statement on Form
S-1 (No. 33-41225) and incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) (Section 230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
3
<PAGE> 5
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if this Registration Statement is on Form S-3 or Form S-8 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement;
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) Filings Incorporating Subsequent Exchange Act Documents By
Reference.
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Request for Acceleration of Effective Date of Filing of
Registration Statement on Form S-8.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act,
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
4
<PAGE> 6
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Diego, State of California, on
January 7, 1997.
CYPRESS BIOSCIENCE, INC.
By /s/ Jay D. Kranzler
-----------------------
Jay D. Kranzler, M.D., Ph.D.
Chief Executive Officer and
Chief Scientific Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jay D. Kranzler and Susan E. Feiner and
each of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorney-in-fact
and agent, or any of them, or his substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Jay D. Kranzler Chief Executive Officer, Chief January 7, 1997
- ------------------------------ Scientific Officer and Vice
Jay D. Kranzler, M.D., Ph.D. Chairman of the Board
(Principal Executive Officer)
/s/ Susan E. Feiner Director of Finance/Controller, January 7, 1997
- ------------------------------ Secretary and Treasurer
Susan E. Feiner (Principal Financial and Accounting Officer)
/s/ Debby Jo Blank President, Chief Operating Officer
- ------------------------------ and Director January 7, 1997
Debby Jo Blank, M.D.
/s/ Richard M. Crooks Chairman of the Board January 7, 1997
- ------------------------------
Richard M. Crooks, Jr.
/s/ Philip J. O'Reilly Director January 8, 1997
- ------------------------------
Philip J. O'Reilly
/s/ Jack H. Vaughn Director January 7, 1997
- ------------------------------
Jack H. Vaughn
</TABLE>
5
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
January 7, 1997
Cypress Bioscience, Inc.
4350 Executive Drive, Suite 325
San Diego, CA 92121
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Cypress Bioscience, Inc. (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission, covering the registration of up to 100,000 shares of
Common Stock $.02 par value (the "Shares") issuable upon the exercise of
certain Warrants to Purchase Common Stock (the "Warrants").
In connection with this opinion, we have examined and relied upon the
Registration Statement, the Warrants, the Company's Amended and Restated
Certificate of Incorporation and Amended and Restated Bylaws, and the originals
or copies certified to our satisfaction of such records, documents,
certificates, memoranda and other instruments as in our judgment are necessary
or appropriate to enable us to render the opinion expressed below. We have
assumed the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof and the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Registration
Statement and the Warrants, will be validly issued, fully paid and
nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
COOLEY GODWARD LLP
/s/ Frederick T. Muto
- ---------------------
Frederick T. Muto
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) of our report dated January 23, 1996, with respect to the
consolidated financial statements of Cypress Bioscience, Inc. included in its
Annual Report (Form 10-K/A) for the year ended December 31, 1995, filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Seattle, Washington
January 2, 1997
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Cypress Bioscience, Inc. (formerly IMRE Corporation) on Form S-8 registering
100,000 shares of common stock issuable pursuant to outstanding common stock
purchase warrants, of our report dated March 15, 1994, on our audit of the
consolidated statements of operations, cash flows and stockholders' equity of
Cypress Bioscience, Inc. for the year ended December 31, 1993 included in its
Annual Report on Form 10-K/A for the year ended December 31, 1995, filed with
the Securities and Exchange Commission.
/s/ COOPERS & LYBRAND L.L.P.
Seattle, Washington
January 3, 1997
<PAGE> 1
EXHIBIT 99.1
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED (I) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO
SUCH SECURITIES UNDER SAID ACT, (II) IN THE ABSENCE OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR 144A UNDER SAID ACT.
CYPRESS BIOSCIENCE, INC.
WARRANT TO PURCHASE COMMON STOCK
ISSUED NOVEMBER 19, 1996
VOID AFTER NOVEMBER 18, 2001
THIS CERTIFIES that, for valuable consulting services rendered and to
be rendered by ____________, (the "Holder") to Cypress Bioscience, Inc. (the
"Corporation") pursuant to that certain letter agreement dated November 19,
1996 by and among the Corporation, Holder and Wm Smith & Co., the Holder or
assigns is entitled to subscribe for and purchase at the Exercise Price (as
defined herein) from the Corporation, up to __________________ (__________)
shares of Common Stock of the Corporation.
SECTION 1. DEFINITIONS. As used herein, the following terms
shall have the following respective meanings:
(A) "Exercise Shares" shall mean the shares of the
Corporation's Common Stock issuable upon exercise of this Warrant.
(B) "Exercise Period" shall mean the period commencing
with the date hereof and ending five (5) years from the date hereof, unless
sooner terminated as provided below.
(C) "Exercise Price" shall mean $2.00 per share, subject
to adjustment pursuant to Section 3 below.
SECTION 2. EXERCISE OF WARRANT.
2.1 EXERCISE. The rights represented by this Warrant may
be exercised in whole or in part at any time, or from time to time, during the
Exercise Period by
1.
<PAGE> 2
delivery of the following to the Corporation at its address set forth above (or
at such other address as it may designate by notice in writing to the Holder):
(A) An executed Notice of Exercise in the form
attached hereto;
(B) Payment of the Exercise Price either (i) in
cash or by check, (ii) by cancellation of indebtedness, or (iii) by converting
this Warrant, or any portion thereof, into shares of Common Stock pursuant to
Section 2.2 below; and
(C) This Warrant.
Upon the exercise of the rights represented by this Warrant, a
certificate or certificates for the Exercise Shares so purchased, registered in
the name of the Holder or persons affiliated with the Holder, if the Holder so
designates, shall be issued and delivered to the Holder within a reasonable
time, not exceeding fifteen (15) days, after the rights represented by this
Warrant shall have been so exercised.
The person in whose name any certificate or certificates for Exercise
Shares are to be issued upon exercise of this Warrant shall be deemed to have
become the holder of record of such shares on the date on which this Warrant
was surrendered and payment of the Exercise Price was made, irrespective of the
date of delivery of such certificate or certificates, except that, if the date
of such surrender and payment is a date when the stock transfer books of the
Corporation are closed, such person shall be deemed to have become the holder
of such shares at the close of business on the next succeeding date on which
the stock transfer books are open.
2.2 PAYMENT BY WARRANT CONVERSION. The Holder may
exercise the purchase right represented by this Warrant with respect to any
portion of the Exercise Shares ("Converted Warrant Shares") by electing to
receive the number of shares as computed as follows:
X = A - B
---------
Y
Where X = the number of shares of Common Stock to be issued to the
holder;
Y = the fair market value of one share of Common Stock (at the
date of such calculation);
A = the aggregate fair market value of the Converted Warrant
Shares (at the date of such calculation); and
B = the aggregate Exercise Price of the Converted Warrant Shares
(as adjusted
2.
<PAGE> 3
For purposes of this Section 2, the fair market value of one
share of Common Stock shall be the average of the closing sales prices quoted
on the NASDAQ SmallCap Market, NASDAQ National Market System or on any exchange
on which the Common Stock is listed, whichever is applicable, as published in
the Wall Street Journal for the five (5) trading days prior to the date of
determination of fair market value.
SECTION 3. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF WARRANT
SHARES. The number and kind of securities purchasable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment from time to
time upon the happening of certain events as follows:
3.1 SUBDIVISION OR COMBINATION OF COMMON STOCK. If at
any time or from time to time after the date of this Warrant (the "Issue Date")
the Corporation shall subdivide its outstanding shares of Common Stock, the
Exercise Price in effect immediately prior to such subdivision shall be reduced
proportionately and the number of shares of Common Stock (calculated to the
nearest whole share) shall be increased proportionately, and conversely, in the
event the outstanding shares of Common Stock shall be combined into a smaller
number of shares, the Exercise Price in effect immediately prior to such
combination shall be increased proportionately and the number of shares of
Common Stock (calculated to the nearest whole share) shall be decreased
proportionately.
3.2 ADJUSTMENT FOR COMMON STOCK DIVIDENDS. If at any
time the Corporation shall declare a dividend or make any other distribution
upon any class or series of capital stock of the Corporation payable in shares
of Common Stock or payable in securities convertible into shares of Common
Stock, the Exercise Price and the number of shares to be obtained upon exercise
of this Warrant shall be adjusted proportionately to reflect the issuance of
any shares of Common Stock or convertible securities, as the case may be,
issuable in payment of such dividend or distribution.
3.3 REORGANIZATION, RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE. In the event of any reorganization of the capital stock of the
Corporation, a consolidation or merger of the Corporation with another
corporation (other than a merger in which the Corporation is the surviving
corporation), the sale of all or substantially all of the Corporation's assets
or any transaction involving the transfer of a majority of the voting power
over the capital stock of the Corporation effected in a manner such that
holders of Common Stock shall be entitled to receive stock, securities, or
other assets or property, then, as a condition of such reorganization,
reclassification, consolidation, merger, sale or transaction, lawful and
adequate provision shall be made whereby the Holder hereof shall have the right
to purchase and receive (in lieu of the shares of the Common Stock of the
Corporation immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby) such shares of stock, securities or
other assets or property as
3.
<PAGE> 4
may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby. In any such reorganization, reclassification,
consolidation, merger, sale or transaction, including successive events of such
nature, appropriate provision shall be made with respect to the rights and
interests of the Holder such that the provisions hereof (including, without
limitation, provisions for adjustments of the Exercise Price and of the number
of shares purchasable and receivable upon the exercise of this Warrant)
thereafter shall be applicable, as nearly practicable, in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
hereof.
3.4 ISSUANCE OF ADDITIONAL SHARES. The Exercise Price in
effect from time to time shall be subject to adjustment upon the issuance of
Common Stock or Convertible Securities (as defined herein) so long as any
Warrants are then issued and outstanding.
(A) SPECIAL DEFINITIONS. For purposes of this
Section 3.4, the following definitions shall apply:
(I) "Option" shall mean contractual
rights, options or warrants to subscribe for, purchase or otherwise acquire
either Common Stock or Convertible Securities.
(II) "Warrants" shall mean, collectively,
this Warrant and any other warrants issued on the Issue Date in connection with
the providing of services with respect to which this Warrant was issued.
(III) "Convertible Securities" shall mean
any evidences of indebtedness, capital stock (other than Common Stock and
Warrants) or other securities directly or indirectly convertible into or
exchangeable for Common Stock.
(IV) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued (or, pursuant to Section 3.4(c),
deemed to be issued) by the Corporation after the Issue Date, other than shares
of Common Stock issued or issuable:
(1) pursuant to Options, Warrants
or Convertible Securities outstanding on the Issue Date;
(2) to directors, officers or
employees of, or consultants to, the Corporation pursuant to any stock option
plan, stock option agreement or other similar agreement approved by the Board
of Directors, subject to adjustment for all subdivisions and combinations;
4.
<PAGE> 5
(3) upon any event for which
adjustment is made pursuant to Section 3 hereof;
(4) by way of dividend or other
distribution on shares excluded from the definition of Additional Shares of
Common Stock by the foregoing clauses (1), (2) or (3) or this clause (4) or on
shares of Common Stock so excluded; or
(5) pursuant to any equipment
leasing, borrowing or similar transaction approved by the Board of Directors.
(B) NO ADJUSTMENT OF EXERCISE PRICE. No
adjustment of the Exercise Price shall be made in respect of the issuance of
Additional Shares of Common Stock unless the consideration per share for an
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the Exercise Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares.
(C) ISSUANCE OF SECURITIES DEEMED TO BE AN
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.
(I) OPTIONS AND CONVERTIBLE SECURITIES.
In the event the Corporation at any time or from time to time after the Issue
Date shall issue any Options or Convertible Securities or shall fix a record
date for the determination of holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the maximum number of
shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that in
any such case in which Additional Shares of Common Stock are deemed to be
issued:
(1) no further adjustment in the
Exercise Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(2) if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase or decrease in the consideration payable to the Corporation or in
the number of shares of Common Stock issuable upon the exercise, conversion or
exchange thereof, the applicable Exercise Price computed upon the original
issue thereof (or upon the occurrence of a record date with
5.
<PAGE> 6
respect thereto), and any subsequent adjustments based thereon, shall, upon any
such increase or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities;
(II) upon the expiration of any such
Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Exercise Price computed
upon the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
such expiration, be recomputed as if:
(1) in the case of Convertible
Securities or Options for Common Stock, the only Additional Shares of Common
Stock issued were the shares of Common Stock, if any, actually issued upon the
exercise of such Options or conversion or exchange of such Convertible
Securities and the consideration received therefor was the consideration
actually received by the Corporation for the issue of all such Options, whether
or not exercised, plus the consideration actually received by the Corporation
upon such exercise, or for the issue of all such Convertible Securities which
were actually converted or exchanged, plus the additional consideration, if
any, actually received by the Corporation upon such conversion or exchange; and
(2) in the case of Options for
Convertible Securities, only the Convertible Securities, if any, actually
issued upon the exercise thereof were issued at the time of issue of such
Options, and the consideration received by the Corporation for the Additional
Shares of Common Stock actually deemed to have been then issued was the
consideration actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration actually received by
the Corporation upon the issue of the Convertible Securities with respect to
which such Options were actually exercised.
(III) Notwithstanding the foregoing,
issuances by the Corporation of Options to directors, officers and employees of
and consultants to the Corporation subsequent to the date hereof shall not be
deemed to be the issuance of Additional Shares of Common Stock.
(D) ADJUSTMENT OF EXERCISE PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event this Corporation shall issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 3.4(c)) without consideration or for a
consideration per share less than the Exercise Price in effect on the date of
and immediately prior to such issue, then and in such event, such Exercise
Price, as applicable, shall be reduced, concurrently with such
6.
<PAGE> 7
issue, to a price (calculated to the nearest cent) determined by multiplying
the Exercise Price by a fraction:
(I) the numerator of which shall be (1)
the number of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock (calculated on a fully
diluted basis assuming the exercise or conversion of all Options, Warrants or
Convertible Securities which are exercisable or convertible at the time such
calculation is being made), plus (2) the number of shares of Common Stock which
the net aggregate consideration, if any, received by the Corporation for the
total number of such Additional Shares of Common Stock so issued would purchase
at the Exercise Price in effect immediately prior to such issuance, and
(II) the denominator of which shall be
(1) the number of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock (calculated on a fully
diluted basis assuming the exercise or conversion of all Options, Warrants or
Convertible Securities which are exercisable or convertible at the time such
calculation is being made), plus (2) the number of such Additional Shares of
Common Stock so issued.
(E) DETERMINATION OF CONSIDERATION. For purposes
of this Section 3.4, the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as follows:
(I) CASH AND PROPERTY. Such
consideration shall:
(1) insofar as it consists of cash,
be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;
(2) insofar as it consists of
property other than cash, be computed at the fair value thereof at the time of
such issue, as determined in good faith by the Board of Directors; and
(3) in the event Additional Shares
of Common Stock are issued together with other shares or securities or other
assets of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses
(1) and (2) above, as determined in good faith by the Board of Directors.
(II) OPTIONS AND CONVERTIBLE SECURITIES.
The consideration per share received by the Corporation for Additional Shares
of Common Stock deemed to have been issued pursuant to Section 3.4(c)(i),
relating to Options and Convertible Securities, shall be determined by
dividing:
7.
<PAGE> 8
(1) the total amount, if any,
received or receivable by the Corporation as consideration for the issue of
such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment
of such consideration) payable to the Corporation upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, or in the
case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
(2) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of
such Convertible Securities.
3.5 MINIMAL ADJUSTMENTS. No adjustment in the Exercise
Price and/or the number of shares of Common Stock subject to this Warrant shall
be made if such adjustment would result in a change in the number of shares
represented by this Warrant of less than one share.
3.6 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence
of each adjustment or readjustment of the Exercise Price pursuant to this
Section 3, the Warrant shall, without any action on the part of the holder
thereof, be adjusted in accordance with this Section 3, and the Corporation
promptly shall compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to the Holder a certificate setting forth
such adjustment or readjustment, setting forth the facts upon which such
adjustment or readjustment is based.
SECTION 4. COVENANTS OF THE CORPORATION.
4.1 COVENANTS AS TO EXERCISE SHARES. The Corporation
covenants and agrees that all Exercise Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be
validly issued and outstanding, fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issuance thereof. The Corporation
further covenants and agrees that the Corporation will at all times during the
Exercise Period, have authorized and reserved, free from preemptive rights, a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant. If at any time during the Exercise
Period the number of authorized but unissued shares of Common Stock shall not
be sufficient to permit exercise of this Warrant, the Corporation will take
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes.
8.
<PAGE> 9
4.2 NO IMPAIRMENT. Except and to the extent as waived or
consented to by the Holder, the Corporation 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 to be observed or performed hereunder by the Corporation, but will
at all times in good faith assist in the carrying out of all the provisions of
this Warrant and in the taking of all such action as may be necessary or
appropriate in order to protect the exercise rights of the Holder against
impairment.
4.3 NOTICES OF RECORD DATE. In the event of any taking
by the Corporation of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid
in previous quarters) or other distribution, the Corporation shall mail to the
Holder, at least ten (10) days prior to the date specified herein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend or distribution.
SECTION 5. REPRESENTATIONS OF HOLDER.
5.1 ACQUISITION OF WARRANT FOR PERSONAL ACCOUNT. The
Holder represents and warrants that it is acquiring the Warrant solely for its
account for investment and not with a view to or for sale or distribution of
said Warrant or any part thereof. The Holder also represents that the entire
legal and beneficial interests of the Warrant and Exercise Shares the Holder is
acquiring is being acquired for, and will be held for, its account only.
5.2 SECURITIES ARE NOT REGISTERED.
(a) The Holder understands that neither the
Warrant nor the Exercise Shares have been registered under the Securities Act
of 1933, as amended (the "Act"), on the basis that no distribution or public
offering of the stock of the Corporation is to be effected. The Holder
realizes that the basis for the exemption may not be present if,
notwithstanding its representations, it has in mind merely acquiring the
securities for a fixed or determinable period in the future, or for a market
rise, or for sale if the market does not rise. The Holder has no such
intention.
(b) The Holder recognizes that the Warrants and
Exercise Shares being acquired by it must be held indefinitely unless they are
subsequently registered under the Act or an exemption from such registration is
available.
(c) The Holder is aware that neither the Warrant
nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Act
unless certain conditions are met and until the Holder has held the Exercise
Shares for at least two years. Among
9.
<PAGE> 10
the conditions for use of Rule 144 is the availability of current information
to the public about the Corporation.
5.3 DISPOSITION OF WARRANT AND EXERCISE SHARES.
(a) The Holder further agrees not to make any
disposition of all or any part of the Warrant or Exercise Shares in any event
unless and until:
(i) The Corporation shall have received
a letter secured by the Holder from the Securities and Exchange Commission (the
"Commission") stating that no action will be recommended to the Commission with
respect to the proposed disposition; or
(ii) There is then in effect a
registration statement under the Act covering such proposed disposition and
such disposition is made in accordance with said registration statement; or
(iii) The Holder shall have notified the
Corporation of the proposed disposition and shall have furnished the
Corporation with a detailed statement of the circumstances surrounding the
proposed disposition, the Holder shall have furnished the Corporation with an
opinion of counsel for the Holder to the effect that such disposition will not
require registration of such Warrant or shares under the Act, and such opinion
of counsel for the Holder shall have been concurred in by the Corporation's
counsel and the Corporation shall have advised the Holder of such concurrence;
provided, however, that no such opinion of counsel shall be required if (i)
such Warrant or shares are offered, sold or otherwise disposed of in accordance
with Rule 144 or 144A under the Act and (ii) the Company shall have been
furnished with such information as the Company may reasonably request to
provide a reasonable assurance that the provisions of Rule 144 or 144A have
been satisfied.
(b) The Holder understands and agrees that all
certificates evidencing the Exercise Shares to be issued to the Holder may bear
the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED (i) IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER THE ACT, (ii) IN THE ABSENCE OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED, OR (iii) UNLESS SOLD PURSUANT TO RULE 144 OR
144A UNDER THE ACT.
10.
<PAGE> 11
SECTION 6. NO STOCKHOLDER RIGHTS. This Warrant in and of itself
shall not entitle the Holder to any voting rights or other rights as a
stockholder of the Corporation.
SECTION 7. TRANSFER OF WARRANT. Subject to applicable laws, the
restriction on transfer set forth on the first page of this Warrant, this
Warrant and all rights hereunder are transferable, by the Holder in person or
by duly authorized attorney, upon delivery of this Warrant and the form of
assignment attached hereto to any transferee designated by Holder. The
transferee shall sign an investment letter in form and substance satisfactory
to the Corporation.
SECTION 8. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If
this Warrant is lost, stolen, mutilated or destroyed, the Corporation may, on
such terms as to indemnity or otherwise as it may reasonably impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof),
issue a new Warrant of like denomination and tenor as the Warrant so lost,
stolen, mutilated or destroyed. Any such new Warrant shall constitute an
original contractual obligation of the Corporation, unless the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.
SECTION 9. NOTICES, ETC. All notices and other communications
required or permitted hereunder shall be in writing and shall be sent by telex,
telegram, express mail or other form of rapid communications, if possible, and
if not then such notice or communication shall be mailed by first-class mail,
postage prepaid, addressed to the Holder and the Corporation at their addresses
set forth herein, or at such other address as one party may furnish to the
other in writing. Notice shall be deemed effective on the date dispatched if
by personal delivery, telecopy, telex or telegram, two days after mailing if by
express mail, or three days after mailing if by first-class mail.
SECTION 10. ACCEPTANCE. Receipt of this Warrant by the Holder
shall constitute acceptance of and agreement to all of the terms and conditions
contained herein.
SECTION 11. GOVERNING LAW. The corporate law of the State of
California shall govern all issues concerning the relative rights of the
Corporation and holders of its securities. All other questions concerning the
construction, validity and interpretation of this Warrant shall be governed by
and construed in accordance with the laws of the State of California as applied
to contracts entered into and performed wholly within the State of California.
11.
<PAGE> 12
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
executed by its duly authorized officer as of _________________, 1996.
CYPRESS BIOSCIENCE, INC.
By:________________________________
Jay D. Kranzler
Chief Executive Officer
Agreed to and accepted this __ day of November 1996.
[NAME]
By:________________________________
12.
<PAGE> 13
NOTICE OF EXERCISE
TO: CYPRESS BIOSCIENCE, INC.
(1) The undersigned hereby elects to purchase ________ shares of
Common Stock of Cypress Bioscience, Inc. (the "Corporation") pursuant to the
terms of the attached Warrant, and:
____ (a) tenders herewith payment of the exercise price in
full, together with all applicable transfer taxes, if
any; or
____ (b) elects to convert the attached Warrant in accordance
with Section 2.2 of such Warrant.
(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) The undersigned represents that (i) the aforesaid shares of
Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares; (ii) the undersigned is aware of the
Corporation's business affairs and financial condition and has acquired
sufficient information about the Corporation to reach an informed and
knowledgeable decision regarding its investment in the Corporation; (iii) the
undersigned is experienced in making investments of this type and has such
knowledge and background in financial and business matters that the undersigned
is capable of evaluating the merits and risks of this investment and protecting
the undersigned's own interests; (iv) the undersigned understands that the
shares of Common Stock issuable upon exercise of this Warrant may have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
by reason of a specific exemption from the registration provisions of the
Securities Act, which exemption depends upon, among other things, the bona fide
nature of the investment intent as expressed herein, and, because such
securities may not have been registered under the Securities Act, they must be
held indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available; (v) the undersigned is aware
that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144
adopted under the Securities Act unless certain conditions are met
1.
<PAGE> 14
and until the undersigned has held the shares for at least two years, that
among the conditions for use of Rule 144 is the availability of current
information to the public about the Corporation; and (vi) the undersigned
agrees not to make any disposition of all or any part of the aforesaid shares
of Common Stock unless and until (i) there is then in effect a registration
statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with said registration statement, (ii) the
undersigned has provided the Corporation with an opinion of counsel
satisfactory to the Corporation, stating that such registration is not required
or (iii) the undersigned has fully complied with Rule 144 or 144A under the
Securities Act.
__________________________________ ______________________________
(Date) (Signature)
2.
<PAGE> 15
NET ISSUE EXERCISE ELECTION NOTICE
To:_____________________________ Date:_____________________________
The undersigned hereby elects under Section 2.2 to surrender the right
to purchase _____________ shares of Common Stock pursuant to this Warrant. The
certificate(s) for the shares issuable upon such net issue exercise election
shall be issued in the name of the undersigned or as otherwise indicated below.
_____________________________
Signature
_____________________________
Name for Registration
_____________________________
Mailing Address
3.
<PAGE> 16
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the portion of the foregoing Warrant exercisable
into ______________ shares of Common Stock of Cypress Bioscience, Inc. and all
rights evidenced thereby are hereby assigned to
Name: ______________________________________________________________
(Please Print)
Address: ______________________________________________________________
(Please Print)
______________________________________________________________
Dated: _________________, 19___
Holder's
Signature: __________________________
Holder's
Address: __________________________
__________________________
4.
