AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 24, 2000
REGISTRATION STATEMENT NO. 333-_____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
ALLIANCE PHARMACEUTICAL CORP.
(Exact name of registrant as specified in its charter)
New York 14-1644018
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
3040 SCIENCE PARK ROAD
SAN DIEGO, CA 92121
(858) 410-5200
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
DUANE J. ROTH
CHIEF EXECUTIVE OFFICER
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, CA 92121
(858) 410-5200
(Name, address, including zip code, and telephone number, of agent for
service of process)
COPY TO:
Melvin Epstein, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED
SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER
THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Title of Each Proposed Proposed
Class of Amount Maximum Maximum Amount of
Securities To Be Offering Aggregate Registration
To Be Registered(1) Price Offering Fee
Registered Per Unit Price
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$0.01 par value 4,588,483 $13.25(2) $60,797,400(2) $16,050.51
- -------------------------------------------------------------------------------------------------------
(1) Pursuant to Rule 416 of the Securities Act of 1933, as amended, there
are also being registered such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of 5%
subordinated convertible debentures, 6% subordinated convertible notes,
Series D Preferred Stock, and upon exercise of warrants to prevent
dilution resulting from stock splits, stock dividends or similar
transactions.
(2) Estimated solely for the purpose of calculating the registration fee
in accordance with Rule 457(c).
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
<PAGE>
ALLIANCE PHARMACEUTICAL CORP.
4,588,483
SHARES OF COMMON STOCK
This prospectus relates to the offer and sale of up to 4,588,483
shares of common stock of Alliance Pharmaceutical Corp. from time to time by the
selling shareholders listed on page 11 this prospectus.
Alliance will not receive any part of the proceeds from the sale of
the shares of common stock covered by this prospectus, although it may receive
proceeds for warrants with exercise prices ranging from $2.45 to $8.655 held by
some of the selling shareholders. Alliance has agreed to bear the expenses of
registration of the shares. The selling shareholders may offer the shares
through brokers, dealers or agents or directly to purchasers. These transactions
may be effected in the over-the-counter market or otherwise, at market prices
prevailing at the time of sale or at privately negotiated prices.
Our common stock is listed on the Nasdaq National Market under the
symbol ALLP. On March 15, 2000, the closing price of the common stock as quoted
on Nasdaq was $12.375 per share.
WE URGE YOU TO READ THE "RISK FACTORS" SECTION BEGINNING ON PAGE 5 OF
THIS PROSPECTUS FOR A SPECIFIC DESCRIPTION OF RISKS ASSOCIATED WITH PURCHASING
OUR COMMON STOCK THAT YOU SHOULD CONSIDER BEFORE MAKING YOUR INVESTMENT
DECISION.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
You should rely only on the information contained in this document or
that we have referred you to. We have not authorized anyone to provide you with
different information.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
The date of this Prospectus is March __, 2000.
<PAGE>
TABLE OF CONTENTS
PAGE
WHERE YOU CAN FIND MORE INFORMATION.......................................2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...........................3
PROSPECTUS SUMMARY........................................................4
RISK FACTORS..............................................................5
USE OF PROCEEDS..........................................................10
SELLING SHAREHOLDERS.....................................................11
PLAN OF DISTRIBUTION.....................................................13
LEGAL MATTERS............................................................15
EXPERTS..................................................................15
NOTE TO READERS OF THIS PROSPECTUS
We were incorporated in 1983 in New York. When we refer to "us," "we,"
"our," "the Company" and "Alliance" in this prospectus, we mean Alliance
Pharmaceutical Corp. and its consolidated subsidiaries. Our address is 3040
Science Park Road, San Diego, California 92121. Information contained on our
website does not constitute part of this prospectus.
IMAGENT(R), LIQUIVENT(R), FLOGEL(R), SATPAD(R) and RODA(R) are
registered trademarks of Alliance. OXYGENT(TM) is a trademark Of Alliance.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3 (the
"Registration Statement") under the Securities Act, with respect to the shares
offered by this prospectus. This prospectus does not contain all the information
set forth in the Registration Statement and its exhibits. Certain portions of
the Registration Statement have been omitted as permitted by the rules and
regulations of the SEC. Copies of the Registration Statement (including the
omitted portions) are available from the SEC upon payment of a fee. For further
information, reference is made to the Registration Statement and the exhibits
filed therewith. Statements contained in this prospectus or the Registration
Statement relating to the contents of any contract or other document filed as an
exhibit to the Registration Statement are not necessarily complete, and in each
instance are qualified in all respects by the full text of such contract or
document.
You should rely only on the information or representations provided in
this prospectus or incorporated by reference. We have not authorized anyone else
to provide you with different information. The selling shareholders have agreed
not to make an offer of the shares of our common stock in any state where the
offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the cover page.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any documents we file at
the SEC's public reference room in Washington, D.C. at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or in the public reference rooms located in New York,
New York and Chicago, Illinois. Please call the SEC at (1-800) SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public at the SEC's website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we
file with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information we later file with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act:
o Annual Report on Form 10-K for the fiscal year ended June 30,
1999;
o Quarterly Reports on Forms 10-Q for the quarters ended September
30, 1999 and December 31, 1999;
o Current Reports on Form 8-K dated October 4, 1999, November 4,
1999 and February 22, 2000; and
o Registration Statement on Form 8-A, dated October 25, 1984.
We will provide without charge to any person to whom this prospectus
is delivered, upon written or oral request of such person, a copy of any or all
of the documents which have been incorporated by reference in this prospectus.
Requests for copies should be directed to Lloyd Rowland, Vice President and
General Counsel, Alliance Pharmaceutical Corp., 3040 Science Park Road, San
Diego, California 92121, telephone (858) 410-5200.
<PAGE>
PROSPECTUS SUMMARY
MANY OF THE MATTERS SET FORTH IN THIS PROSPECTUS CONTAIN
FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN THIS
PROSPECTUS. WE REFER YOU TO CAUTIONARY INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS AND IN OTHER DOCUMENTS WE FILE WITH THE SECURITIES AND EXCHANGE
COMMISSION FROM TIME TO TIME.
THE COMPANY
Alliance Pharmaceutical Corp. is a pharmaceutical research and
development company with three products in late-stage human (clinical)
development, each of which is designed to address a different medical need.
These products are based on our expertise with perfluorochemicals and other
technologies. Perfluorochemicals are man-made chemicals that can dissolve and
carry oxygen throughout the body, including within the lung. Perfluorochemicals
have also been shown to be useful in enhancing ultrasound images.
OXYGENT is a temporary oxygen carrier which is being developed to
reduce or eliminate the need for human blood transfusions during elective
surgeries where substantial blood loss is common. OXYGENT is a "blood
substitute" that uses perfluorochemicals as raw materials, instead of human or
animal blood. A Phase 3 clinical trial is under way in Europe to assess whether
the use of OXYGENT can reduce the need for donor blood in surgical patients. In
December 1999, we initiated a complementary Phase 3 U.S. study in patients
undergoing coronary artery bypass surgery. Phase 3 studies are typically the
final human studies required prior to requesting marketing approval from a U.S.
or foreign regulatory agency.
LIQUIVENT is a perfluorochemical liquid that is trickled directly into
the lungs of a patient who is being supported by a mechanical ventilator.
LIQUIVENT therapy is expected to reduce the number of days a patient requires
ventilator support by reducing the damage resulting from prolonged use of the
ventilator, opening up collapsed air sacs, assisting in providing oxygen to and
removing carbon dioxide from the lungs, and flushing debris from the lungs. We
are currently conducting a Phase 2/3 clinical study in the U.S., Canada, and
Europe to evaluate the use of LIQUIVENT for the treatment of adult patients with
acute (sudden-onset) lung injury and acute respiratory distress syndrome;
however, one or more additional studies may be required prior to filing a New
Drug Application with the FDA.
IMAGENT is a perfluorochemical-based diagnostic agent intended for use
with ultrasound diagnostic techniques to enhance real-time images of blood flow
in the blood vessels, heart, and other organs. In May 1999, we announced that
two Phase 3 studies in which IMAGENT was evaluated as a contrast agent
demonstrated highly statistically significant improvement in visualization of
the walls of the heart (endocardial border delineation) compared to standard
(non-contrasted) ultrasound imaging. On December 14, 1999, the FDA accepted our
New Drug Application for IMAGENT, which is currently being reviewed.
In addition, we have other products in early development.
FLOGEL is a liquid/gel that is intended to reduce the occurrence of
internal adhesions (scar tissue) in patients undergoing surgeries involving
their internal organs.
RODA is a monitor intended to provide real-time measurements of the
cardiovascular (heart and blood system) and oxygenation status of surgical
patients.
PULMOSPHERES. In November 1999, we announced that we transferred
aspects of our PULMOSPHERES technology to Inhale Therapeutic Systems, Inc. for
$15 million in cash, $5 million in Inhale common stock and future development
milestones and royalty payments. In exchange, Inhale received rights to the
PULMOSPHERES technology in the field of respiratory delivery,
PulmoSpheres-related assets and $5 million in Alliance common stock. The parties
have each agreed to register the respective common stock sold to the other
party. In connection with the transaction, Alliance retained the right to
develop two PULMOSPHERES products for use in the respiratory field, as well as
all non-respiratory and liquid ventilation applications of PULMOSPHERES.
On February 11, 2000, certain investors purchased $15 million in
principal amount of four-year 5% subordinated convertible debentures. The
debentures are convertible at any time at each investor's option into shares of
our common stock at $9.65 per share, subject to adjustment to protect against
dilution. This initial conversion price was below the trading market price of
the stock on the day the debentures were issued. We have recognized an immediate
charge of $3.7 million to interest expense for the beneficial conversion
feature. The investors have the option at any time to purchase, and we have
certain rights to require the investors to purchase, an additional $15 million
of four-year 5% subordinated convertible debentures, convertible into our common
stock at $12.06 per share.
RISK FACTORS
Investing in our stock involves a high degree of risk. You should
carefully consider the following risk factors and all other information
contained in this prospectus before purchasing our stock. Any of the following
risks could materially adversely affect our business, operating results and
financial condition and could result in a complete loss of your investment.
WE HAVE A HISTORY OF OPERATING LOSSES AND LIMITED PRODUCT REVENUES AND WE MAY
NEVER BECOME PROFITABLE
We have had net operating losses since our inception and we expect
such losses to continue until we receive revenues from product sales. As of
December 31, 1999, we had an accumulated deficit of $340.5 million. For the
years ended June 30, 1997, 1998, and 1999, we incurred net losses of $19.0
million, $33.0 million, and $62.5 million, respectively. Our net loss for the
six months ended December 31, 1999 was $13.8 million. Substantially all of our
revenues to date have come from sources other than product sales, such as
licensing fees, milestone payments and payments to fund research and development
activities under joint development and license agreements.
WE MAY NOT BE ABLE TO OBTAIN THE ADDITIONAL FINANCING WE WILL NEED TO COMPLETE
DEVELOPMENT AND INTRODUCE PRODUCTS
The costs of our current clinical trials are high. We believe that our
existing capital resources, including estimated net proceeds of $14.5 million
from the convertible debenture offering, will satisfy our capital requirements
through at least June 2000. However, we will need additional financing to
finance our business through at least the balance of the year and possibly
longer. Our future capital requirements will depend on many factors, including:
o results of our late-stage clinical trials
o progress with preclinical testing
o continued scientific progress in our research and development
programs
o the time and cost involved in obtaining regulatory approvals
o changes in existing collaborative relationships
o patent costs
o competing technological and market developments
o the cost of manufacturing scale-up
Accordingly, we cannot estimate the amount of additional financing that we will
require, but we know that it will be substantial.
FAILURE TO LICENSE OUR PRODUCTS COULD SERIOUSLY HINDER OUR ABILITY TO FURTHER
DEVELOP OUR PRODUCTS AND MARKET THEM SUCCESSFULLY
If we do not negotiate acceptable collaborative arrangements for our
principal products, we will lack the funds to further develop them. We do not
have internal marketing and sales capabilities and will need to rely on
collaborative partners to market and sell any products that we may successfully
develop. Even if we find collaborative partners, we may not be able to
completely control the amount and timing of resources our collaborative partners
will devote to these activities. We intend to seek collaborative arrangements
for OXYGENT and LIQUIVENT to help cover the cost of development, but we do not
know whether we will be successful. If we cannot find collaborative
relationships or other sources of financing we may not be able to continue some
of our development programs and would be forced to sell assets, including
technology, to raise capital.
A TERMINATION OF THE SCHERING LICENSE AGREEMENT COULD ADVERSELY AFFECT OUR
RESEARCH, DEVELOPMENT AND, ULTIMATELY, MARKETING OF IMAGENT
We depend on Schering for development and regulatory approvals outside
the United States and for worldwide marketing of IMAGENT. As of December 30,
1998, the Schering license agreement was modified to reduce ongoing development
reimbursement, add new milestone payments and restructure the methods for
calculating royalties. The Schering license agreement may be terminated on one
month's advance notice.
IF WE DO NOT OBTAIN GOVERNMENTAL APPROVALS FOR OUR PRODUCTS, WE WILL BE UNABLE
TO MARKET THEM
We will not be able to commercialize our products until we have
acceptable clinical trial results and regulatory approval from the FDA and
foreign regulatory authorities. The FDA and other regulatory authorities require
that the safety and efficacy of a drug be supported by results from adequate and
well-controlled clinical trials before approval for commercial sale. If the
results of the clinical trials of our products do not demonstrate that they are
safe and effective, we will not be able to submit to the FDA a New Drug
Application or other relevant applications for pre-market approval. Further, the
results of preclinical testing and initial clinical trials do not necessarily
predict how safe and effective a product will be when it is evaluated in
large-scale Phase 3 clinical trials. It is possible that unacceptable side
effects may be discovered at any time. A number of companies have suffered
significant setbacks in advanced clinical trials, despite promising results in
earlier trials.
Even if we believe the clinical trials demonstrate the safety and
efficacy of a product, the FDA and other regulatory authorities may not accept
our assessment of the results. The FDA has required other companies involved in
the development of blood substitutes to increase the size of their Phase 3
trials, extending the time and cost to complete the trials. In any case, in
order to demonstrate the safety and efficacy of the products we may have to
conduct additional clinical trials beyond those currently planned. The process
of obtaining regulatory clearances or approvals is costly and time-consuming.
DELAYS IN THE COMPLETION OF OUR CLINICAL TRIALS COULD INCREASE OUR COSTS
We cannot predict how long our preclinical and clinical trials will
take or whether they will be successful. The rate of completion of the clinical
trials for our products depends on many factors, including obtaining adequate
clinical supplies and the rate of patient recruitment. Patient recruitment is a
function of many factors, including the size of the patient population, the
proximity of patients to clinical sites, and the eligibility criteria for
patients who may enroll in the trial. We may experience increased costs, program
delays, or both, if there are delays in patient enrollment in the clinical
trials.
WE WILL BE UNABLE TO MANUFACTURE OUR PRODUCTS IF WE DO NOT RECEIVE FDA APPROVAL
While we believe that we can produce materials for clinical trials and
the initial market launch for OXYGENT and IMAGENT at our existing San Diego
facilities and for LIQUIVENT at our Otisville, New York facility, we will need
FDA approval in order to do so. We do not know whether the FDA will determine
that our facilities comply with Good Manufacturing Practices. A delay in FDA
approval of our manufacturing facilities would delay the marketing of our
products.
IF WE CANNOT PROTECT OUR PATENTS AND PROPRIETARY TECHNOLOGY, WE WILL BE UNABLE
TO SUCCESSFULLY MANUFACTURE AND MARKET OUR PRODUCTS
We believe that our success will depend largely on our ability to
obtain and maintain patent protection for our own inventions, and to license the
use of patents owned by third parties. We have obtained patents covering certain
intermediate, and high-concentration PFC emulsions, patents related to liquid
ventilation, and patents covering certain stabilized microbubble compositions,
as well as other patents. We have filed, and when appropriate will file, other
patent applications with respect to our products and processes in the United
States and in foreign countries. We cannot assure you, however, that we will
develop any additional products and processes that will be patentable or that
any additional patents will be issued to us. It is possible that any of our
patents or any patents licensed to us may be challenged successfully. It is also
possible that we may unintentionally infringe on patents of third parties, or
that we may have to alter our products or manufacturing processes to take into
account the patents of third parties and this may cause delays in product
development. Further, we cannot assure that we will be able to alter our
products or manufacturing processes to avoid third-party patents, in which case
we may have to terminate the development or commercialization of a product or
pay royalties to the holders of the patents. Litigation, which could result in a
substantial cost to us, may be necessary to enforce any patents we own and/or to
determine the scope and validity of others' proprietary rights. We also attempt
to protect our proprietary products and processes by relying on trade secret
laws and non-disclosure and confidentiality agreements with our employees and
certain other persons who have access to our products or processes. It is
possible that others will develop such products or processes independently or
obtain access to such products or processes. Our competitive position may be
affected adversely if others develop or obtain products or processes similar to
ours.
In particular, with respect to ultrasound contrast imaging patents,
there are several companies with issued patents and other patent applications in
process. Many of these patents overlap each other, and it will take several
years to clarify which ones are valid and enforceable. Although we believe we
have the right to manufacture, use and sell IMAGENT once it is approved, it is
possible that we may need to license rights under patents owned by others, and
that such rights may not be available. Other companies may well find that their
current or future activities violate our patents. We believe certain companies
have obtained patents to which they are not entitled under U.S. law, and have
requested patent interference proceedings in the U.S. Patent Office to resolve
those issues.
WE WILL NOT BE ABLE TO DEVELOP OR MANUFACTURE OUR PRODUCTS IF WE ARE UNABLE TO
OBTAIN THE NECESSARY RAW MATERIALS
Some of the raw materials for our products are available from single
sources. At times, one or more of these raw materials may not be available or
may be available only in limited quantities. Our ability to develop our products
could be materially adversely affected if sufficient supplies of raw materials
are not available. We are currently negotiating with some of these suppliers for
long-term supply contracts for raw materials; however, we do not know whether we
will be able to obtain commitments for a long-term supply of these raw materials
on acceptable terms.
UNFORESEEN TECHNOLOGICAL AND SCIENTIFIC PROBLEMS OR THIRD-PARTY DEVELOPMENT MAY
DELAY OR PREVENT MARKETING
We or our collaborative partners may encounter unforeseen
technological or scientific problems, including adverse side effects, which may
force us to abandon or substantially change the plan of development of a
specific product or process. A technological change or product development by
others may also have a significant adverse effect on our operations.
THE LACK OR INADEQUACY OF THIRD-PARTY REIMBURSEMENT FOR OUR PRODUCTS WOULD HAVE
A MATERIAL ADVERSE EFFECT ON OUR OPERATIONS
Our ability to commercialize our products successfully will depend in
part on the extent to which the cost of the products and related treatment will
be reimbursed by government authorities, private health insurers and other
organizations, such as HMOs. Third-party payors are increasingly challenging the
prices charged for medical products and services. Also, the trend toward managed
healthcare in the United States, the growth of healthcare organizations such as
HMOs, and legislative proposals to reform healthcare and government insurance
programs could significantly influence the purchase of healthcare services and
products, resulting in lower prices and reducing demand for our products. The
cost containment measures that healthcare providers are instituting and any
healthcare reform could affect our ability to sell our products by not allowing
us to make a profit on sales of products. We cannot assure you that full or
partial reimbursement in the United States or foreign countries will be
available for any of our products. If reimbursements are not available or
sufficient, we may not be able to sell our products. We cannot forecast what
additional legislation or regulation relating to the healthcare industry or
third-party coverage and reimbursement may be enacted in the future, or what
effect the legislation or regulation would have on our business.
MANY OF OUR EXISTING OR POTENTIAL COMPETITORS HAVE SUBSTANTIALLY GREATER
RESOURCES AND MAY BE BETTER EQUIPPED TO DEVELOP, MANUFACTURE AND MARKET PRODUCTS
SIMILAR TO OURS
We may not be able to compete successfully in developing and marketing
our products. There are many pharmaceutical companies, biotechnology companies,
public and private universities, and research organizations actively engaged in
research and development of products that compete with our products. These
companies have more resources and may develop and introduce products and
processes competitive with or superior to ours. In addition, our products and
technologies may be rendered uncompetitive or obsolete by the development of
other technologies or products that have an entirely different approach or means
of accomplishing the same purposes.
OUR PRODUCTS AND THE PROCESSES WE USE COULD EXPOSE ALLIANCE TO SUBSTANTIAL
LIABILITY
Product liability could arise from claims by users of our products or
of products manufactured by processes we developed, or from manufacturers or
others selling our products, either directly or as a component of other
products. Our product liability insurance coverage may not be adequate.
WE MAY ISSUE ADDITIONAL PREFERRED STOCK, THE TERMS OF WHICH COULD ADVERSELY
AFFECT OUR COMMON STOCK
Our Board of Directors has the authority to issue up to an additional
three million shares of preferred stock and may determine the rights,
preferences, privileges and restrictions of such shares without any further vote
or action by the shareholders. The possible issuance of preferred stock could
have the effect of delaying, deferring or preventing a change in control of
Alliance. The conversion and other features of any series of preferred stock may
also limit the price that investors might be willing to pay in the future for
shares of our common stock.
THE SUBSTANTIAL NUMBER OF OUR SHARES THAT ARE ELIGIBLE FOR FUTURE SALE COULD
ADVERSELY AFFECT OUR ABILITY TO FIND NEW EQUITY INVESTORS
As of March 15, 2000, 8,733,029 shares of our common stock (or 15.6%
of the total number of shares outstanding on a fully diluted basis) were
issuable upon the exercise of outstanding options and warrants. Also, over a
period of approximately four years, we may issue an indeterminate number of
additional shares of our common stock to the former shareholders of MDV
Technologies, Inc., a company we acquired in 1996. The existence of such
warrants, options and convertible securities, as well as certain registration
rights, may adversely affect the terms on which we may obtain additional equity
financing and the aftermarket trading of our stock. The holders of the
outstanding warrants and options are likely to exercise their securities at a
time when we would otherwise be able to obtain capital on terms more favorable
than those provided by the exercise or conversion prices thereof.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus may contain forward-looking statements regarding our
plans, expectations, estimates and beliefs. Our actual results could differ
materially from those discussed in, or implied by, these forward-looking
statements. Forward-looking statements are identified by words such as
"believe," "anticipate," "expect," "intend," "plan," "will," "may," and other
similar expressions. In addition, any statements that refer to expectations,
projections or other characterizations of future events or circumstances are
forward-looking statements. Forward-looking statements in this document include,
but are not necessarily limited to, those relating to:
o our ability to raise additional capital when needed
o obtaining, or our ability to obtain, approval by the FDA and
other regulatory authorities for certain products
o our ability or capacity to manufacture, market and distribute our
products
o uncertainty of market acceptance of our products
o our ability to obtain patents for our products and technologies
o relationships with and abilities of important suppliers and
business partners
o the development of new products and enhanced versions of existing
products
Factors that cause actual results or conditions to differ from those anticipated
by these and other forward-looking statements include those more fully described
in the risk factors section and elsewhere in this prospectus. We are not
obligated to update or revise these forward-looking statements to reflect new
events or circumstances.
USE OF PROCEEDS
The proceeds from the sale of the common stock covered by this
prospectus will belong to the selling shareholders. Any funds received from the
exercise of warrants will be used for working capital.
SELLING SHAREHOLDERS
The following table sets forth the aggregate number of shares held by
the selling shareholders and offered by the selling shareholders hereunder and
the percentage of all shares of our common stock held by such selling
shareholders after giving effect to the offering (based on 47,087,766 shares of
common stock outstanding as of March 15, 2000). There is no assurance that the
selling shareholders will sell any or all of the shares offered hereby.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK
BENEFICIALLY OWNED NUMBER OF SHARES OF
BEFORE OFFERING(1) COMMON STOCK TO BE NUMBER OF SHARES OF COMMON STOCK
OFFERED BY THIS BENEFICIALLY OWNED AFTER THE
SELLING SHAREHOLDERS PROSPECTUS OFFERING(2)
NUMBER PERCENTAGE
<S> <C> <C> <C> <C>
Inhale Therapeutic 1,134,738 1,134,738 -0- -0-
Systems Inc.(3)
Brown Simpson Strategic 507,772 507,772 -0- -0-
Value Fund, Ltd.(4)
Brown Simpson Strategic 269,430 269,430 -0- -0-
Value Fund, L.P.(4)
Maatchap Petrus(4) 777,202 777,202 -0- -0-
Imperial Bank(5) 180,000 180,000 -0- -0-
Deitje D. Dekker(6) 118,642 66,667 51,975 *
Anna C. Dekker(7) 117,542 66,667 50,975 *
Sophia G. Dekker(8) 117,542 66,667 50,975 *
Emma C. Dekker(9) 117,892 66,667 51,225 *
Jan A. Dekker(10) 214,972 55,422 159,550 *
Harris & Harris Group, Inc.(11) 800,000 800,000 -0- -0-
Stephen M. McGrath(12) 259,016 133,333 125,683 *
Burrill & Company(13) 350,000 350,000 -0- -0-
Mark Biderman(14) 1,063 1,063 -0- -0-
Frederich Bloch(14) 188 188 -0- -0-
Roger Einiger(14) 7,995 7,995 -0- -0-
Nathan Gantcher(14) 16,823 16,823 -0- -0-
Steven Levinson(14) 4,450 4,450 -0- -0-
Joseph V. Missett(14) 1,052 1,052 -0- -0-
Oppenheimer & Co.(14) 1,736,398 42,398 1,694,000 3.4%
Alan Rappaport(14) 4,706 4,706 -0- -0-
Stephen Robert(14) 16,823 16,823 -0- -0-
Eric Rosenfeld(14) 363 363 -0- -0-
Gerald Rothstein(14) 3,040 3,040 -0- -0-
James Stanko(14) 363 363 -0- -0-
Jeffrey Stern(14) 2,946 2,946 -0- -0-
Richard White(14) 564 564 -0- -0-
Ronald Peters(14) 663 363 300 *
Charles Rose(14) 121 121 -0- -0-
Lisa Walters(14) 60,660 10,660 50,000 *
* Indicates ownership of less than 1% of outstanding shares
(1) Includes the shares of common stock underlying the warrants, 5%
subordinated convertible debentures, 6% subordinated convertible notes and
Series D Preferred Stock being offered by this prospectus.
(2) Based on 49,411,511 shares of Alliance's common stock outstanding and
which number assumes the sale of all the shares of common stock registered
under this prospectus to persons who are not affiliates of the selling
shareholders.
(3) Represents common stock received in a commercial transaction.
(4) Represents common stock underlying four-year, 5% subordinated convertible
debentures, dated February 11, 2000, convertible at $9.65 per share.
(5) Represents shares underlying a warrant, dated March 30, 1999, exercisable
at $2.875 per share.
(6) Offered shares represent 16,667 shares underlying a warrant, dated May 20,
1999, exercisable at $2.45 per share and 50,000 shares received upon
conversion of a 6% subordinated convertible note due May 20, 2002.
(7) Offered shares represent 16,667 shares underlying a warrant, dated May 20,
1999, exercisable at $2.45 per share and 50,000 shares received upon
conversion of a 6% subordinated convertible note due May 20, 2002.
(8) Offered shares represent 16,667 shares underlying a warrant, dated May 20,
1999, exercisable at $2.45 per share and 50,000 shares received upon
conversion of a 6% subordinated convertible subordinated note due May 20,
2002.
(9) Offered shares represent 16,667 share underlying a warrant, dated May 20,
1999, exercisable at $2.45 per share and 50,000 shares received upon
conversion of a 6% subordinated convertible note due May 20, 2002.
(10) Offered shares represent 55,422 shares underlying a warrant, dated July 2,
1999, exercisable at $2.95 per share.
(11) Represents 600,000 shares issued upon conversion of a 6% subordinated
convertible note due May 20, 2002 and 200,000 shares received upon
exercise of a warrant, dated May 20, 1999, at $2.45 per share.
(12) Represents 100,000 shares issued upon conversion of a 6% subordinated
convertible note due May 20, 2002 and 33,333 shares underlying a warrant,
dated May 20, 1999, exercisable at $2.45 per share.
(13) Represents 100,000 shares underlying a warrant, dated June 23, 1999,
exercisable at $2.6875 per share and 250,000 shares underlying a warrant,
dated November 15, 1999, exercisable at $4.375 per share.
(14) Offered shares represent shares underlying a warrant, dated August 31,
1988, exercisable at $8.655 per share.
</TABLE>
We have or have had the following material relationships with certain
selling shareholders. As of March 10, 2000, we have a loan with an outstanding
principal balance of $10.2 million with Imperial Bank. We issued Jan Dekker a
warrant to purchase 55,422 shares of our common stock as payment for financial
services provided by him to us. Stephen M. McGrath is a director of Alliance.
Burrill & Company provides consulting services to us in connection with certain
of our products. Oppenheimer & Co. provided financial consulting services to us
from time to time, including in connection with the 5% subordinated convertible
debentures issued as of February 11, 2000. Lisa Walters is a selling agent with
Roth Capital Partners, Inc., which served as the placement agent in our June
1999 offering.
PLAN OF DISTRIBUTION
We are registering the securities offered by this prospectus on behalf
of the Holders. As used herein, the term Holders means the holders of the
securities and includes donees and pledgees selling the securities received from
named Holders after the date of this prospectus. All costs, expenses and fees in
connection with the registration of the securities will be paid by Alliance.
Brokerage commissions and similar selling expenses, if any, attributable to the
sale of the securities will be paid by the Holders. Sales of the securities may
be effected by Holders from time to time in one or more types of transactions
(which may include block transactions) on the Nasdaq National Market, in the
over-the-counter market, in negotiated transactions, through put or call options
transactions relating to the securities, through short sales of the securities,
or a combination of such methods of sale, at market prices prevailing at the
time of sale, or at negotiated prices. These transactions may or may not involve
brokers or dealers. The Holders have advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there an
underwriter or coordinated broker acting in connection with the proposed sale of
the securities by the Holders.
The Holders may enter into hedging transactions with broker-dealers or
other financial institutions. In connection with such transactions,
broker-dealers or other financial institutions may engage in short sales of the
securities or of securities convertible into or exchangeable for the securities
in the course of hedging positions they assume with Holders. The Holders may
also enter into options or other transactions with broker-dealers or other
financial institutions which require the delivery to broker-dealers or other
financial institutions of the securities offered by this prospectus and the
broker-dealer or other financial institution may resell pursuant to this
prospectus (as amended or supplemented to reflect such transaction).
The Holders may effect such transactions by selling the securities
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from Holders and/or the purchasers of the
securities for whom such broker-dealers may act as agents or to whom they sell
as principal, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions).
The Holders and any broker-dealers that act in connection with the
sale of the securities might be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act, and any commissions received by
broker-dealers and any profit on the resale of the securities sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. Alliance has agreed to indemnify each Holder against
certain liabilities, including liabilities arising under the Securities Act. The
Holders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the securities against certain
liabilities, including liabilities arising under the Securities Act.
The Holders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act.
The Holders will be subject to the prospectus delivery requirements of
the Securities Act. We have informed the Holders that the anti-manipulative
provisions of Regulation M under the Exchange Act may apply to their sales in
the market.
Holders also may resell all or a portion of the securities in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet the criteria and conform to the requirements of Rule 144.
Upon notification by a Holder to Alliance that any material
arrangement has been entered into with a broker-dealer for the sale of the
securities offered hereby through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplement to this prospectus will be filed, if required, pursuant to Rule
424(b) under the Securities Act. The prospectus will disclose (i) the name of
each such Holder and of the participating broker-dealer(s), (ii) the number of
shares involved, (iii) the initial price at which such securities were sold,
(iv) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this prospectus and (vi) other facts material to the transactions.
In addition, upon notification by a Holder to Alliance that a donee or pledgee
intends to sell more than 500 shares, we will file a supplement to this
prospectus.
From time to time the Holders may pledge their securities pursuant to
the margin provisions of their customer agreements with their brokers. Upon a
default by a Holder, the broker may offer and sell the pledged securities from
time to time.
<PAGE>
LEGAL MATTERS
Stroock & Stroock & Lavan LLP has passed upon certain legal matters
regarding the common stock for Alliance.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our annual report on Form 10-K for the year
ended June 30, 1999, as set forth in their report (which contains an explanatory
paragraph describing conditions that raise substantial doubt about the Company's
ability to continue as a going concern as described in Note 1 to the
consolidated financial statements), which is incorporated by reference in this
prospectus and elsewhere in the registration statement. Our financial statements
are incorporated by reference in reliance on Ernst & Young LLP's report, given
on their authority as experts in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the offering, all of which
will be borne by the Registrant, are as follows:
SEC Registration Fee............................. $17,655.45
Blue Sky Fees and Expenses....................... 0.00
Legal Fees and Expenses.......................... 10,000.00
Accounting Fees and Expenses..................... 8,000.00
Miscellaneous.................................... 0.00
Total............................................ $35,655.45
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Article VI of the By-Laws of the Company (filed
as Exhibit 3(b) to the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1989) and to Sections 721-727 of the New York Business
Corporation Law, which, among other things and subject to certain conditions,
authorize the Company to indemnify each of its officers and directors against
certain liabilities and expenses incurred by such persons in connection with
claims made by reason of their being such officers or directors.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
4. (a) Form of Warrant dated June 23, 1999, July 2, 1999
and November 15, 1999**
(b) Form of Warrant dated August 31, 1988**
(c) Form of Warrant dated May 20, 1999(1)
(d) Form of Warrant dated March 30, 1999(1)
(e) Form of 6% Subordinated Convertible Note due May 20,
2002(1)
(f) Form of 5% Subordinated Convertible Debenture dated
February 11, 2000(2)
(g) Form of Securities Purchase Agreement dated February
11, 2000(2)
(h) Form of Registration Rights Agreement dated February
11, 2000(2)
5. Opinion of Stroock & Stroock & Lavan, counsel for
Alliance.**
23. (a) Consent of Stroock & Stroock & Lavan (included in
Exhibit 5 hereof).**
(b) Consent of Ernst & Young LLP, Independent Auditors.**
24. Power of Attorney.**
- ---------
** Filed herewith
(1) Incorporated by reference to the Company's Annual Report on Form 10-K
dated September 28, 1999.
(2) Incorporated by reference to the Company's Report on Form 8-K dated
February 22, 2000.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) 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.
(b) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to
be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus 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) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 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 of 1933 and will be governed by the final adjudication of such
issue.
(d) 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(c)(3)
of the Securities Act of 1933;
(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;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement.
PROVIDED, HOWEVER, that paragraphs (d)(1)(i) and (d)(1)(ii) do
not apply if the registration statement is on Form S-3, 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 15(d) of the Securities and Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(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.
<PAGE>
SIGNATURES
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-3 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 March 24, 2000.
ALLIANCE PHARMACEUTICAL CORP.
(Registrant)
Date: March 24, 2000 By: /S/ THEODORE D. ROTH
-----------------------
Theodore D. Roth
President and Chief Operating Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Duane J. Roth and Theodore D. Roth, or
either 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 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 attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, 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, agent,
or their substitutes 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.
/S/ DUANE J. ROTH Chairman and Chief Executive March 24, 2000
- ------------------------- Officer
Duane J. Roth
/S/ THEODORE D. ROTH Director, President and Chief March 24, 2000
- ------------------------- Operating Officer
Theodore D. Roth
/S/ TIM T. HART Chief Financial Officer, March 24, 2000
- ------------------------- Treasurer and Chief
Tim T. Hart Accounting Officer
/S/ PEDRO CUATRECASAS, M.D. Director March 24, 2000
- ---------------------------
Pedro Cuatrecasas, M.D.
/S/ CARROLL O. JOHNSON Director March 24, 2000
- -------------------------
Carroll O. Johnson
/S/ STEPHEN M. MCGRATH Director March 24, 2000
- -------------------------
Stephen M. McGrath
/S/ HELEN M. RANNEY, M.D. Director March 24, 2000
- -------------------------
Helen M. Ranney, M.D.
/S/ THOMAS F. ZUCK, M.D. Director March 24, 2000
- -------------------------
Thomas F. Zuck, M.D.
/S/ DONALD E. O'NEIL Director March 24, 2000
- -------------------------
Donald E. O'Neill
/S/ JEAN G. RIESS, PH.D Director March 24, 2000
- -------------------------
Jean G. Riess, Ph.D.
Exhibit 4(a)
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE
STATE SECURITIES LAWS AND THE TERMS AND CONDITIONS HEREOF. THE HOLDER OF THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO THE
RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK TIME, ON JUNE 23, 2004 OR UPON EARLIER EXPIRATION
PURSUANT TO ARTICLE VIII HEREIN.
WARRANT TO PURCHASE
No. ___ **_______ SHARES**
FORM OF
WARRANT TO PURCHASE
COMMON STOCK
OF ALLIANCE PHARMACEUTICAL CORP.
This certifies that, for good and valuable consideration received,
________________ and its registered, permitted assigns (collectively, the
"Warrantholder"), are entitled to purchase from Alliance Pharmaceutical Corp., a
corporation incorporated under the laws of New York (the "Company"), subject to
the terms and conditions hereof, at any time on or after June 23, 1999 and
before 5:00 P.M., New York time, on June 23, 2004, or such earlier date of
expiration as may occur pursuant to Article VIII herein, (or, if such day is not
a Business Day, as defined herein, at or before 5:00 P.M., New York time, on the
next following Business Day), the number of fully paid and non-assessable shares
of Common Stock (par value $.01) of the Company (the "Common Stock") stated
above at the Exercise Price (as defined herein). The Exercise Price and the
number of shares purchasable hereunder are subject to adjustment as provided in
Article III hereof.
ARTICLE I
SECTION 1.01: DEFINITION OF TERMS. As used in this Warrant, the
following capitalized terms shall have the following respective meanings:
(a) BUSINESS DAY: A day other than a Saturday, Sunday or other day on
which banks in the State of New York are authorized by law to remain closed.
(b) COMMON STOCK: Common Stock, $.01 par value per share, of the
Company.
(c) COMMON STOCK EQUIVALENTS: Securities that are convertible into or
exercisable for shares of Common Stock.
(d) EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
(e) EXERCISE PRICE: $2.6875 per Warrant Share, as such price may be
adjusted from time to time pursuant to Article III hereof.
(f) EXPIRATION DATE: 5:00 P.M., New York time, on June 23, 2004, or
such earlier date of expiration as may occur pursuant to Article VIII herein.
(g) HOLDER: A holder of Registrable Securities.
(h) NASD: National Association of Securities Dealers, Inc.
(i) PERSON: An individual, partnership, joint venture, corporation,
trust, unincorporated organization or government or any department or agency
thereof.
(j) PIGGYBACK REGISTRATION: See Section 7.01.
(k) PROSPECTUS: Any prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments and all material incorporated by
reference in such Prospectus.
(l) PUBLIC OFFERING: A public offering of any of the Company's equity
or debt securities pursuant to a registration statement under the Securities
Act.
(m) REGISTRATION EXPENSES: Any and all expenses incident to
performance of or compliance with Article VII hereunder, including, without
limitation, (i) all SEC and stock exchange or NASD registration and filing fees;
(ii) all fees and expenses of complying with state securities or blue sky laws
(including reasonable fees and disbursements of counsel for the underwriters, if
any, in connection with the blue sky qualifications of the Registrable
Securities); (iii) all printing, mailing, messenger and delivery expenses; (iv)
the fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits and/or "cold
comfort" letters required by or incident to such performance and compliance; and
(v) any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, and the reasonable fees and expenses of any special
experts retained in connection with the requested registration, but excluding
underwriting discounts, commissions and transfer taxes, if any.
(n) REGISTRABLE SECURITIES: Warrant Shares and/or other securities
that may be or are issued by the Company upon exercise of such Warrants,
including those which may thereafter be issued by the Company in respect of any
such securities by means of any stock splits, stock dividends, recapitalizations
or the like, and as adjusted pursuant to Article III hereof; PROVIDED, HOWEVER,
that as to any particular Registrable Securities, such securities shall cease to
be Registrable Securities when (i) a Registration Statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such Registration
Statement; or (ii) they shall have been distributed to the public pursuant to
Rule 144 (or any successor provision) under the Securities Act.
(o) REGISTRATION STATEMENT: Any registration statement of the Company
filed or to be filed with the SEC, which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated by
reference by such registration statement, if any.
(p) SEC: The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act or the Exchange Act.
(q) SECURITIES ACT: The Securities Act of 1933, as amended.
(r) WARRANTS: This Warrant and all other warrants that may be issued
in its place (together evidencing the right to purchase an aggregate of ONE
HUNDRED THOUSAND (100,000) shares of Common Stock, subject to adjustment from
time to time in accordance with Article III).
(s) WARRANTHOLDER: The person(s) or entity(ies) to whom this Warrant
is originally issued, or any successor in interest thereto, or any assignee or
transferee thereof, in whose name this Warrant is registered upon the books to
be maintained by the Company for that purpose.
(t) WARRANT SHARES: Common Stock purchasable upon exercise of the
Warrants.
ARTICLE II
DURATION AND EXERCISE OF WARRANT
SECTION 2.01: DURATION OF WARRANT. Subject to the terms contained
herein, this Warrant may be exercised at any time after June 23, 1999, and
before 5:00 P.M. New York time, on the Expiration Date (or, if such day is not a
Business Day, at or before 5:00 P.M. New York time, on the next following
Business Day). If this Warrant is not exercised at or before 5:00 P.M., New York
time, on the Expiration Date, it shall become void, and all rights hereunder
shall thereupon cease.
SECTION 2.02: EXERCISE OF WARRANT.
(a) The Warrantholder may exercise this Warrant, in whole or in part,
upon surrender of this Warrant with the Subscription Form hereon duly executed,
to the Company at its corporate office in San Diego, California, together with
the full Exercise Price for each share of Common Stock to be purchased in lawful
money of the United States, or by certified check, bank draft or postal or
express money order payable in United States Dollars to the order of the Company
and upon compliance with and subject to the conditions set forth herein.
(b) Upon receipt of this Warrant with the Subscription Form duly
executed and accompanied by payment of the aggregate Exercise Price for the
shares of Common Stock for which this Warrant is then being exercised, the
Company will cause to be issued certificates for the total number of whole
shares of Common Stock for which this Warrant is being exercised in such
denominations as are required for delivery to the Warrantholder, and the Company
shall thereupon deliver such certificates to the Warrantholder. If at the time
this Warrant is exercised, a registration statement is not in effect to register
under the Securities Act the Warrant Shares issuable upon exercise of this
Warrant, the Company may require the Warrantholder to make such investment
intent representations, and may place such legends on certificates representing
the Warrant Shares, as may be reasonably required in the opinion of counsel to
the Company to permit the Warrant Shares to be issued without such registration.
(c) In case the Warrantholder shall exercise this Warrant with respect
to less than all of the shares of Common Stock that may be purchased under this
Warrant, the Company will execute a new warrant certificate in the form of this
Warrant for the balance of the shares of Common Stock that may be purchased upon
exercise of this Warrant and deliver such new warrant certificate to the
Warrantholder.
(d) The Company covenants and agrees that it will pay when due and
payable any and all taxes which may be payable in respect of the issue of this
Warrant or in respect of the issue of any Warrant Shares. The Company shall not,
however, be required to pay any tax imposed on income or gross receipts or any
tax which may be payable in respect of any transfer involved in the issuance or
delivery of this Warrant or of Warrant Shares in a name other than that of the
Warrantholder at the time of surrender and, until the payment of such tax, shall
not be required to issue such Warrant Shares.
ARTICLE III
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be subject to
adjustment from time to time upon the happening of certain events as provided in
this Article III.
SECTION 3.01: MECHANICAL ADJUSTMENTS.
(a) If at any time prior to the full exercise of this Warrant, the
Company shall (i) pay a dividend or make a distribution on its shares of Common
Stock in shares of Common Stock (other than cash dividends or distributions out
of earnings); (ii) subdivide, reclassify or recapitalize its outstanding Common
Stock into a greater number of shares; or (iii) combine, reclassify or
recapitalize its outstanding Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date of such subdivision,
combination, reclassification or recapitalization shall be proportionately
adjusted so that the Warrantholder shall be entitled to receive the aggregate
number and kind of shares which, if this Warrant had been exercised in full
immediately prior to such time, he would have owned upon such exercise and been
entitled to receive upon such dividend, subdivision, combination,
reclassification or recapitalization. Such adjustment shall be made successively
whenever any event listed in this paragraph 3.01(a) shall occur.
(b) In case the Company shall hereafter fix a record date for making a
distribution to the holders of Common Stock of assets or evidences of its
indebtedness (excluding cash dividends or distributions out of earnings and
dividends or distributions referred to in paragraph (a) of this Section 3.01) or
Common Stock subscription rights, options or warrants for Common Stock or Common
Stock Equivalents, then in each such case the Exercise Price in effect after
such record date shall be adjusted to the price determined by multiplying the
Exercise Price in effect immediately prior thereto by a fraction, the numerator
of which shall be the total number of shares of Common Stock outstanding at such
time multiplied by the current market price per share of Common Stock (as
defined in paragraph (d) of this Section 3.01), less the fair market value (as
determined by the Company's Board of Directors) of said assets or evidences of
indebtedness so distributed or of such Common Stock subscription rights, option
and warrants or of such Common Stock Equivalents, and the denominator of which
shall be the total number of shares of Common Stock outstanding at such time
multiplied by such current market price per share of Common Stock. Such
adjustment shall be made successively whenever the record date for such a
distribution is fixed and shall become effective immediately after such record
date.
(c) Whenever the Exercise Price payable upon exercise of each Warrant
is adjusted pursuant to paragraphs (a) or (b) of this Section 3.01, the Warrant
Shares shall simultaneously be adjusted by multiplying the number of Warrant
Shares then issuable upon exercise of each Warrant by the Exercise Price in
effect on the date thereof and dividing the product so obtained by the Exercise
Price as adjusted.
(d) For the purpose of any computation under this Section 3.01, the
current market price per share of Common Stock at any date shall be deemed to be
the average of the daily closing price for 30 consecutive Business Days
commencing 45 Business Days before such date. The closing price for each day
shall be the last sale price regular way or, in case no such reported sales
takes place on such day, the average of the last reported bid and asked prices
regular way, in either case on the principal national securities exchange on
which the Common Stock is admitted to trading or listed, or if not listed or
admitted to trading on such exchange, the representative closing bid price as
reported by NASDAQ, or other similar organization if NASDAQ is no longer
reporting such information, or if not so available, the fair market price as
determined in good faith by the Board of Directors.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least twenty-five cents
($.25) in such price; provided, however, that any adjustments which by reason of
this paragraph (e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 3.01 shall be made to the nearest cent or to the nearest one-hundredth
of a share, as the case may be. Notwithstanding anything in this Section 3.01 to
the contrary, the Exercise Price shall not be reduced to less than the then
existing par value of the Common Stock as a result of any adjustment made
hereunder.
(f) In the event that at any time, as a result of any adjustment made
pursuant to paragraph (a) of this Section 3.01, the Warrantholder thereafter
shall become entitled to receive any shares of the Company, other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in paragraphs (a) to (e), inclusive, of this Section
3.01.
SECTION 3.02: NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares or the Exercise Price is adjusted as herein provided, the Company shall
prepare and deliver to the Warrantholder a certificate signed by its President,
any Vice President, Treasurer or Secretary, setting forth the adjusted number of
shares purchasable upon the exercise of this Warrant and the Exercise Price of
such shares after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which adjustment
was made.
SECTION 3.03: NO ADJUSTMENT FOR DIVIDENDS. No adjustment in respect of
any cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
SECTION 3.04: PRESERVATION OF PURCHASE RIGHTS IN CERTAIN TRANSACTIONS.
In case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale or conveyance to another corporation
of the property of the Company as an entirety or substantially as an entirety,
the Company agrees that a condition of such transaction will be that the Company
or such successor or purchasing corporation, as the case may be, shall execute
with the Warrantholder an agreement granting the Warrantholder the right
thereafter, upon payment of the Exercise Price in effect immediately prior to
such action, to receive upon exercise of this Warrant the kind and amount of
shares and other securities and property which he would have owned or have been
entitled to receive after the happening of such consolidation, merger, sale or
conveyance had this Warrant been exercised immediately prior to such action.
Such agreement shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
III. The provisions of this Section 3.04 shall similarly apply to successive
consolidations, mergers, sales, or conveyances.
SECTION 3.05: FORM OF WARRANT AFTER ADJUSTMENTS. The form of this
Warrant need not be changed because of any adjustments in the Exercise Price or
the number or kind of the Warrant Shares, and Warrants theretofore or thereafter
issued may continue to express the same price and number and kind of shares as
are stated in this Warrant as initially issued.
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
SECTION 4.01: NO RIGHTS AS SHAREHOLDERS; NOTICE TO WARRANTHOLDERS. Nothing
contained in this Warrant shall be construed as conferring upon the
Warrantholder or his transferees the right to vote or to receive dividends or to
consent or to receive notice as shareholders in respect of any meeting of
shareholders for the election of directors of the Company or any other matter,
or any rights whatsoever as shareholders of the Company. If, however, at any
time prior to the expiration or exercise in full of the Warrants, any of the
following events shall occur:
(a) the Company shall declare any dividend payable in any securities
upon its shares of Common Stock or make any distribution (other than a cash
dividend) to the holders of its shares of Common Stock; or
(b) the Company shall offer to the holders of its shares of Common
Stock any additional shares of Common Stock or Common Stock Equivalents or any
right to subscribe thereto; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger, or sale of all or substantially
all of its property, assets, and business as an entirety) shall be proposed;
then, in any one or more of said events, the Company shall give notice
of such event to the Warrantholder. Such giving of notice shall be initiated (i)
at least 25 days prior to the date fixed as a record date or the date of closing
the Company's Stock transfer books for the determination of the shareholders
entitled to such dividend, distribution, or subscription rights, or for the
determination of the shareholders entitled to vote on such proposed dissolution,
liquidation or winding up. Such notice shall specify such record date or the
date of closing the stock transfer books, as the case may be. Failure to provide
such notice shall not affect the validity of any action taken in connection with
such dividend, distribution or subscription rights, or proposed dissolution,
liquidation or winding up.
SECTION 4.02: LOST, STOLEN, MUTILATED OR DESTROYED WARRANTS. If this
warrant certificate is lost, stolen, mutilated or destroyed, the Company may, on
such terms as to indemnity or otherwise as it may in its discretion impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new warrant certificate of like denomination and tenor as, and
in substitution for this Warrant.
SECTION 4.03: RESERVATION OF SHARES.
(a) The Company covenants and agrees that at all times it shall
reserve and keep available for the exercise of this Warrant such number of
authorized shares of Common Stock as are sufficient to permit the exercise in
full of this Warrant.
(b) The Company covenants that all shares of Common Stock issued on
exercise of this Warrant will be validly issued, fully paid, nonassessable and
free of pre-emptive rights.
SECTION 4.04: NO FRACTIONAL SHARES. Anything contained herein to the
contrary notwithstanding, the Company shall not be required to issue any
fraction of a share in connection with the exercise of this Warrant, and in any
case where the Warrantholder would, except for the provisions of this Section
4.04, be entitled under the terms of this Warrant to receive a fraction of a
share upon the exercise of this Warrant, the Company shall, upon the exercise of
this Warrant and receipt of the Exercise Price, issue the number of whole shares
purchasable upon exercise of this Warrant. The Company shall be required to make
any cash or other adjustment in respect of such fraction of a share to which the
Warrantholder would otherwise be entitled.
ARTICLE V
TREATMENT OF WARRANTHOLDER
SECTION 5.01. Prior to due presentment for registration of transfer of this
Warrant, the Company may deem and treat the Warrantholder as the absolute owner
of this Warrant (notwithstanding any notation of ownership or other writing
hereon) for the purpose of any exercise hereof and for all other purposes and
the Company shall not be affected by any notice to the contrary.
ARTICLE VI
TRANSFER RESTRICTIONS
SECTION 6.01: RESTRICTIONS ON TRANSFER. This Warrant may be transferred, in
whole or in part, subject to the following restrictions. Neither this Warrant
nor the Registrable Securities received upon exercise of this Warrant shall be
transferable unless registered under the Securities Act or unless an exemption
from registration is available. Unless and until this Warrant or the Registrable
Securities are so registered, such securities and any certificate thereof shall
contain a legend on the face thereof, in form and substance satisfactory to
counsel for the Company, stating that the Warrant or Registrable Securities, as
the case may be, may not be sold, transferred or otherwise disposed of unless,
in the opinion of counsel satisfactory to the Company, which may be counsel to
the Company, the Warrant, or Registrable Securities may be transferred without
such registration. This Warrant and the Registrable Securities may also be
subject to restrictions on transferability under applicable state securities or
blue sky laws. Unless and until this Warrant or Registrable Securities, as the
case may be, are registered under the Securities Act, the holder of such
securities shall, if requested by the Company, provide to the Company an opinion
of counsel reasonably satisfactory to the Company, to the effect that (i) the
Warrant or Registrable Securities, as the case may be, may be transferred
without such registration and (ii) the transfer will not violate any applicable
state securities or blue sky laws. Any transfer of this Warrant permitted
hereunder shall be made by surrender of this Warrant to the Company with the
form of assignment annexed hereto properly completed and duly executed and
accompanied by (x) any necessary documentation required hereunder and (y) funds
sufficient to pay any transfer taxes applicable. Upon satisfaction of all
transfer conditions, the Company, without charge, shall execute and deliver a
new Warrant in the name of the transferee named in such transfer form, and this
Warrant promptly shall be canceled.
SECTION 6.02: SPLIT-UP, COMBINATION, EXCHANGE AND TRANSFER OF WARRANTS.
Subject to and limited by the provisions of Section 6.01 hereof, this Warrant
may be split up, combined or exchanged for another Warrant or Warrants
containing the same terms to purchase a like aggregate number of shares of
Common Stock. If the Warrantholder desires to split up, combine or exchange this
Warrant, he shall make such request in writing delivered to the Company and
shall surrender to the Company this Warrant and any other Warrants to be so
split up, combined or exchanged. Upon any such surrender for a split-up,
combination, or exchange, the Company shall execute and deliver to the Person
entitled thereto a Warrant or Warrants, as the case may be, as so requested. The
Company shall not be required to effect any split-up, combination or exchange
which will result in the issuance of a Warrant entitling the Warrantholder to
purchase upon exercise a fraction of a share of Common Stock or a fractional
Warrant. The Company may require such Warrantholder to pay a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
split-up, combination or exchange of Warrants.
ARTICLE VII
REGISTRATION UNDER THE SECURITIES ACT OF 1933
SECTION 7.01: PIGGYBACK REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If at any time after June
30, 1996, the Company proposes to register any class of debt or equity security
or any Common Stock Equivalent under the Securities Act on any form for the
general registration of securities under such Securities Act, whether or not for
its own account (other than a registration form relating to (i) a registration
of a stock option, stock purchase or compensation or incentive plan or stock
issued or issuable pursuant to any such plan, or a dividend investment plan;
(ii) a registration of stock proposed to be issued in exchange for securities or
assets of, or in connection with a merger or consolidation with, another
corporation; or (iii) a registration of stock proposed to be issued in exchange
for other securities of the Company) in a manner which would permit registration
of Registrable Securities for sale to the public under the Securities Act (a
"Piggyback Registration"), it will at such time give prompt written notice to
all Holders of Registrable Securities of its intention to do so and of such
Holders' rights under this Section 7.01. Upon the written request of any such
Holder made within 15 days after the receipt of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by such
Holder and the intended method of disposition thereof), the Company will include
in the Registration Statement the Registrable Securities which the Company has
been so requested to register by the Holders thereof.
(b) WITHDRAWAL OF PIGGYBACK REGISTRATION BY COMPANY. If, at any time
after giving written notice of its intention to register any securities but
prior to the effective date of the Registration Statement filed in connection
with such registration, the Company shall determine for any reason not to
register such securities, the Company may, at its election, give written notice
of such determination to each Holder and, thereupon shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration. All best efforts obligations of the Company pursuant to Section
7.04 shall cease if the Company determines to terminate any registration where
Registrable Securities are being registered pursuant to this Section 7.01.
(c) PIGGYBACK REGISTRATION OF UNDERWRITTEN PUBLIC OFFERINGS. If a
Piggyback Registration requested pursuant to this Section 7.01 involves an
underwritten offering, then, (i) all Holders requesting to be included in the
Company's registration must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and conditions as apply
to other selling shareholders or the Company, if there are no selling
shareholders; and (ii) any Holder requesting to be included in such registration
may elect in writing, not later than five (5) Business Days prior to the
effectiveness of the Registration Statement filed in connection with such
registration, not to register such securities in connection with such
registration.
(d) PAYMENT OF REGISTRATION EXPENSES FOR REGISTRATION. The Company
will pay all Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section 7.01, except for the
fees and disbursements of any counsel retained by the Holders of the Registrable
Securities being registered and such Holders' pro rata share of any filing fees
or other expenses directly and solely resulting from the inclusion of the
Registrable Securities in the Registration Statement, including underwriting
discounts and commissions.
(e) PRIORITY IN PIGGYBACK REGISTRATION. If a registration pursuant to
this Section 7.01 involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the number or kind of
Registrable Securities requested to be included in such registration would have
a material adverse effect on such offering, including an adverse decrease in the
price at which such securities can be sold, then the amount or kind of
Registrable Securities to be offered for the accounts of Holders shall be
eliminated entirely or reduced pro rata as to all requesting Holders on the
basis of the relative number of Registrable Securities each such Holder has
requested to be included in such registration, to the extent necessary to reduce
the total amount or kind of securities to be included in such offering to the
amount recommended by such managing underwriter; provided, however, that no
securities may be offered in such registration for the account of persons other
than the Company by virtue of their also having "piggyback" registration rights,
or otherwise, unless the Registrable Securities requested to be included in such
registration are so included on a pro rata basis.
(f) EXPIRATION OF PIGGYBACK REGISTRATION IN RIGHTS. The Piggyback
Registration rights granted to the Holders of Registrable Securities by this
Section 7.01 shall survive the exercise of the Warrant or the transactions or
events pursuant to which such Registrable Securities were issued, but all such
rights will terminate in all events two (2) years after exercise of this
Warrant.
SECTION 7.02: BUY-OUTS OF REGISTRATION DEMAND. In lieu of carrying out
its obligations to effect the Piggyback Registration of Registrable Securities
pursuant to this Article VII, the Company may discharge such obligation by
offering to purchase and, if accepted, by purchasing such Registrable Securities
requested to be registered at 95% of the closing bid or sale price of the Common
Stock on the day the request or demand for Registration is made. If the offer to
purchase is accepted by the Holder, payment will be made by wire transfer or
certified check in U.S. dollars within ten (10) business days of receipt by the
Company of written acceptance by such Holder, accompanied by the stock
certificate representing such shares duly endorsed to the Company.
SECTION 7.03: REGISTRATION PROCEDURES. If and whenever the Company is
required pursuant to this Article VII to use its best efforts to effect the
registration of the Registrable Securities under the Securities Act, the Company
will, as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement which
includes the Registrable Securities and use its best efforts to cause such
Registration Statement to become and remain effective until the distribution
described in the registration statement has been completed or until the
participating Holders can sell all such Registrable Securities pursuant to Rule
144;
(b) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective and to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of Registrable Securities covered by such Registration Statement
whenever a Holder shall desire to sell or otherwise dispose of the same, but
only to the extent provided in this Article VII;
(c) furnish to each participating Holder (and to each underwriter, if
any, of Registrable Securities) such number of copies of a Prospectus, including
a preliminary Prospectus, in conformity with the requirements of the Securities
Act, and such other documents, as such Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such state securities or
blue sky laws of such jurisdiction as each participating Holder shall reasonably
request and do any and all other acts and things which may be necessary under
such securities or blue sky laws to enable such Holder to consummate the public
sale or other disposition in such jurisdictions of the Registrable Securities,
except that the Company shall not for any purpose be required to consent
generally to service of process or qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(e) before filing the Registration Statement or Prospectus or
amendments or supplements thereto, furnish to counsel selected by the
participating Holders copies of such documents proposed to be filed which shall
be subject to the reasonable approval of such counsel;
(f) enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offer;
(g) notify the participating Holders at any time when a Prospectus
relating to any Registrable Securities covered by such Registration Statement is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the Prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing
and promptly file such amendments and supplements as may be necessary so that,
as thereafter delivered to such Holders, such Prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing and use its best efforts to cause each
such amendment and supplement to become effective;
(h) furnish at the request of the participating Holders on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Article VII an opinion, dated
such date, of the counsel representing the Company, for purposes of such
registration, in form and substance as is customarily given by company counsel
to the underwriters in an underwritten public offer addressed to the
underwriters, if any, and to such Holders, and (ii) a letter dated such date,
from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offer, addressed to the underwriters and
to such Holders; and
(i) use its best efforts to cause all such Registrable Securities to
be listed on the securities exchange or the Nasdaq National Market, if any, on
which the Company's Common Stock is then listed.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities and such other
information as may otherwise be required to be included in such Registration
Statement, as the Company may from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (g) hereof, such
Holder will forthwith discontinue disposition of such Registrable Securities
covered by such Registration Statement or Prospectus until such Holder's receipt
of the copies of the supplemented or amended Prospectus, or until it is advised
in writing by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any additional or supplemental filings which
are incorporated by reference in such Prospectus, and, if so directed by the
Company, such Holder will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Registrable Securities current at the time of
receipt of such notice.
SECTION 7.04: INDEMNIFICATION. In the event Registrable Securities are
registered pursuant to this Article VII:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder of Registrable Securities which are included in a
Registration Statement filed pursuant to the provisions of this Agreement and
any underwriter (within the meaning of the Securities Act) with respect to the
Registrable Securities, and each officer, director, employee and agent thereof
and each person, if any, who otherwise controls such Holder or underwriter
(within the meaning of the Securities Act), against any losses or claims,
damages, expenses or liabilities, joint or several, to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, or otherwise, insofar as such losses, claims, damages, expenses or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue or allegedly untrue statement of any material fact contained in the
Registration Statement for the Registrable Securities, including any preliminary
Prospectus or final Prospectus contained therein or any amendments or
supplements thereto, or any document incident to the registration or
qualification of any Registrable Securities, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or allegedly necessary to make the statements therein not
misleading or arise out of any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law; and will reimburse such Holder, any underwriter, officer,
director, employee, agent or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 7.04(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, expense, liability or action
if such settlement is effected without the written consent of the Company, which
shall not be unreasonably withheld, nor shall the Company be liable under this
Section 7.04(a) to such Holder, such underwriter, officer, director, employee,
agent or controlling person for any such loss, claim, damage, expense, liability
or action to the extent that it arises out of, or is based upon, an untrue
statement or allegedly untrue statement or omission or alleged omission made in
connection with such Registration Statement, preliminary Prospectus, final
Prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with information furnished in writing expressly for use in connection
with such registration by such Holder, such underwriter, officer, director,
employee, agent or such controlling person.
(b) To the extent permitted by law, each Holder of Registrable
Securities which are included in a Registration Statement filed pursuant to the
provisions of this Agreement will indemnify and hold harmless the Company, each
of its employees, agents, directors and officers, each person, if any, who
controls the Company within the meaning of the Securities Act, and any
underwriter (within the meaning of the Securities Act) against any losses,
claims, damages, expenses or liabilities to which the Company or any such person
or underwriter may become subject, under the Securities Act, the Exchange Act or
other federal or state law or otherwise, insofar as such losses, claims,
damages, expenses or liabilities (or actions in respect thereof) arise out of,
or are based upon any untrue or allegedly untrue statement of any material fact
contained in a Registration Statement for the Registrable Securities, including
any preliminary Prospectus or final Prospectus contained therein or any
amendments or supplements thereto, or any document incident to the registration
or qualification of any Registrable Securities, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or allegedly necessary to make the statements therein not
misleading; in each case to the extent that such untrue statement or allegedly
untrue statement or omission or alleged omission was made in such Registration
Statement, preliminary Prospectus, final Prospectus or amendments or supplements
thereto, in reliance upon and in conformity with information furnished in
writing by such Holder expressly for use in connection with such registration;
provided, however, that the indemnity agreement contained in this Section
7.04(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, expense, liability or action if such settlement is effected without the
written consent of such Holder, which shall not be unreasonably withheld; and
such Holder will reimburse the Company or any such person or underwriter for any
legal or other expenses reasonably incurred by the Company or any such person or
underwriter in connection with investigating or defending such loss, claim,
damage, liability, expense or action.
(c) Promptly after receipt by an indemnified party under this Section
7.04 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against any indemnifying party under
this Section 7.04, notify the indemnifying party in writing of the commencement
thereof and generally summarize such action. The indemnifying party shall have
the right to participate in and to assume the defense thereof with counsel
mutually satisfactory to the parties. An indemnifying party shall not have the
right to direct the defense of such an action on behalf of an indemnified party
if such indemnified party has reasonably concluded that there may be defenses
available to it that are different from or additional to those available to the
indemnifying party; provided, however, that in such event, the indemnifying
party shall bear the fees and expenses of only one (1) separate counsel for all
indemnified parties, such separate counsel to be reasonably satisfactory to the
indemnifying party. The failure to notify an indemnifying party promptly of the
commencement of any such action if prejudicial to the ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7.04, but the omission so to notify the
indemnifying party will not relieve such party of any liability that such party
may have to any indemnified party otherwise than under this Section.
(d) To the extent permitted by law, the indemnification provided for
under this Section 7.05 will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling person (within the meaning of the Securities Act) of
such indemnified party and will survive the transfer of securities.
(e) If for any reason the foregoing indemnity is unavailable to, or is
insufficient to hold harmless an indemnified party, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnifying party on the one
hand and the indemnified party on the other but also the relative fault of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations. Notwithstanding the foregoing, no underwriter, if any,
shall be required to contribute any amount in excess of the amount by which the
total price at which the securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligation of any underwriters
to contribute pursuant to this Section 7.04(e) shall be several in proportion to
their respective underwriting commitments and not joint.
SECTION 7.05: RESTRICTIONS ON PUBLIC SALE. Each holder of Registrable
Securities whose Registrable Securities are covered by a Registration Statement
filed pursuant to Article VII hereof agrees, if requested by the managing
underwriters in an underwritten offering, not to effect any public sale or
distribution of any securities of the Company of the same class as the
securities included in such Registration Statement, including a sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
registration), during the 10-day period prior to, and during the 90-day period
beginning on, the closing date of the underwritten offering made pursuant to
such Registration Statement, to the extent timely notified in writing by the
managing underwriters.
The foregoing provision shall not apply to any Holder if such Holder
is prevented by applicable statute or regulation from entering into any such
agreement. However, any such Holder shall undertake, in its request to
participate in any such underwritten offering, not to effect any public sale or
distribution of the applicable Registrable Securities commencing on the date of
sale of such applicable class of Registrable Securities unless it has provided
45 days' prior written notice of such sale or distribution to the underwriter or
underwriters.
SECTION 7.06: REPORTS UNDER THE EXCHANGE ACT. With a view to making
available to the Holder the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder of Registrable Securities to sell such securities of the Company
to the public without registration, and with a view to making it possible for
any such holder to register the Registrable Securities pursuant to a
registration on Form S-3, the Company agrees, subject to this Article VII in the
case of Section 7.06(b), to:
(a) make available adequate current public information as contemplated
by Rule 144 (c)(1) or (2);
(b) take such action as is necessary to enable a Holder to utilize
Form S-3 for the sale of Registrable Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(d) furnish to a Holder owning any Registrable Securities upon request
(i) a written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, or that it
qualifies as a registrant whose Registrable Securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
required in availing any Holder of Registrable Securities of any rule or
regulation of the SEC which permits the selling of any such Registrable
Securities without registration or pursuant to such form.
ARTICLE VIII
OTHER MATTERS
SECTION 8.01: EXPENSES OF TRANSFER. The Company will from time to time
promptly pay, subject to the provisions of Section 6.01, 6.02 and paragraph (d)
of Section 2.02, all taxes and charges that may be imposed upon the Company in
respect to the issuance or delivery of Warrant Shares upon the exercise of this
Warrant by the Warrantholder.
SECTION 8.02: SUCCESSORS AND ASSIGNS. All the covenants and provisions of
this Warrant by or for the benefit of any party hereto shall bind and inure to
the benefit of its permitted successors and assigns hereunder.
SECTION 8.03: AMENDMENTS AND WAIVERS. The provisions of this Warrant,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waiver or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of holders
of at least a majority of the outstanding Warrants or Registrable Securities
(assuming, for purposes of calculating such consent, that all Warrantholders
have exercised the Warrants at the time such consent is sought). Warrantholders
and Holders shall be bound by any consent authorized by this Section whether or
not certificates representing such Warrants or Registrable Securities have been
marked to indicate such consent.
SECTION 8.04: GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 8.05: SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
SECTION 8.06: INTEGRATION/ENTIRE AGREEMENT. This Warrant is intended to be
a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties, or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to this Warrant. This Warrant supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
SECTION 8.07: NOTICES. Notices or demand pursuant to this Warrant to be
given or made by the Warrantholder to or on the Company shall be sufficiently
given or made if sent (i) by recognized international courier such as Federal
Express or DHL or (ii) by first class mail, postage prepaid, addressed, until
another address is designated in writing by the Company, as follows:
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, CA 92121
Attention: President
and to
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, CA 92121
Attention: General Counsel
Any action or demand authorized by this Warrant to be given or made by the
Company to or on the Warrantholder or a Holder of Registrable Securities shall
be sufficiently given or made if sent (i) by recognized international courier
such as Federal Express or DHL or (ii) by first class mail, postage prepaid, to
the Warrantholder or the Holder of Registrable Securities, at his last known
address as it shall appear on the books of the Company.
SECTION 8.08: HEADINGS. The Article headings herein are for convenience
only and are not part of this Warrant and shall not affect the interpretation
thereof.
<PAGE>
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company as
of the ____ day of _________________.
ALLIANCE PHARMACEUTICAL CORP.
By:______________________
<PAGE>
FORM OF ASSIGNMENT
(To be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _____________________________________________________________ the right to
purchase ____________________ shares of common stock evidenced by the within
Warrant, and appoints
___________________________________________________________ to transfer same on
the books of Alliance Pharmaceutical Corp. with full power of substitution in
the premises.
Dated: ____________________________, 199__
(Signature must conform in
all respects to the name of
Warrantholder as specified
on the face of the Warrant,
without alteration,
enlargement or any change
whatsoever, and the
signature must be
guaranteed in the usual
manner)
Signature Guaranteed:
_______________________________
<PAGE>
SUBSCRIPTION FORM
To Be Executed By The Warrantholder If He Desires To Exercise The Warrant In
Whole Or In Part:
To:
The undersigned, ____________________________,
(Name of Warrantholder)
(____________________________________________)
(Please insert Social Security or other identifying number of subscriber)
hereby irrevocably elects or exercises the right of purchase represented by the
within Warrant for, and to purchase thereunder, __________ shares of Common
Stock provided for therein and tenders payment herewith to the order of Alliance
Pharmaceutical Corp. in the amount $__________. The undersigned requests that
certificates for such shares of Common Stock be issued as follows:
Name:
Address:
Deliver to:
Address:
and, if said number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under the within Warrant be registered
in the name of, and delivered to, the undersigned at the address states below:
Address:
Date:
Signature:
Note: The signature of this
Subscription must
correspond with the name as
written upon the face of
this Warrant in every
particular, without
alternation or enlargement
or any change whatsoever.
Exhibit 4(b)
- -------------------------------------------------------------------------------
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE
STATE SECURITIES LAWS AND THE TERMS AND CONDITIONS HEREOF. THE HOLDER OF THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO THE
RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK TIME, ON July 31, 1998.1
***********************************************************
No. ____
FORM OF
WARRANT
to
SUBSCRIBE FOR AND PURCHASE
COMMON STOCK, NO PAR VALUE
of
------------------------------
**********************************************************
This certifies that, for good and valuable
consideration,______________________________, a California corporation (the
"Corporation"), grants to _______________________________________ or registered
assigns (the "Warrantholder"), the right to subscribe for and purchase from the
Corporation, at the price specified in subsection 2.1 hereof during the period
specified in subsection 2.2 hereof, ______________________________________
validly issued, fully paid and non-assessable shares, as such number of shares
may be adjusted from time to time (the "Warrant Shares"), of the Corporation's
Common Stock, no par value (the "Common Stock"), subject to the provisions and
upon the terms and conditions herein set forth.
This warrant is one of a series of warrants (individually a "Warrant",
collectively the "Warrants") issued by the Corporation representing the right
initially to purchase in the aggregate _______ shares of Common Stock
(representing in the aggregate a minimum of 2.85% up to a maximum of 2.89% of
the Corporation's outstanding Common Stock on a fully-diluted basis on the date
hereof) based on the number of Units issued by the Corporation and Otisville
BioPharm, Inc. pursuant to the Private Placement Memorandum dated June 8, 1988,
as amended.
- -----------------------------------------------------------------------------
- ---------------
1 Pursuant to an action by the Board of Directors on September 1, 1995,
the expiration date was extended to July 31, 2000.
<PAGE>
1. DEFINED TERMS. For purposes of this Warrant:
1.1 "Initial Public Offering" shall mean the first time after the date
of this Warrant at which an offering, whether primary or secondary, of shares of
Common Stock, options, warrants or securities convertible or exchangeable (with
or without payment of additional consideration) for shares of Common Stock or
rights to acquire shares of Common Stock is registered pursuant to an effective
registration statement filed by the Corporation under the Securities Act of
1933, as amended (the "Securities Act") (other than a registration statement
filed on Form S-4, or any successor form thereto, relating to a transaction
which, if consummated, would constitute a Surviving Combination.) An Initial
Public Offering will be deemed to be consummated (i) upon the first sale under
the related registration statement in the case of an underwritten offering and
(ii) when the related registration statement first becomes effective in the case
of an offering that is not underwritten.
1.2 "Non-Surviving Combination" shall mean any merger, consolidation
or other business combination by the Corporation with one or more other Persons
in which any such other Person is the survivor, or a sale of all or
substantially all of the assets of the Corporation to one or more such other
Persons, and with respect to which cash and/or non-cash consideration is
distributed to holders of shares of Common Stock.
1.3 "Person" shall mean individual, partnership, corporation, joint
venture, association, joint stock company, trust or unincorporated organization,
or a government or agency or political subdivision thereof.
1.4 "Surviving Combination" shall mean any merger, consolidation or
other business combination by the Corporation with one or more other Persons in
which the Corporation is the survivor, or a purchase of assets by the
Corporation from one or more other Persons, if in either case the Corporation is
thereafter required to file reports with respect to its shares of Common Stock
with the Securities and Exchange Commission pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended.
1.5 "Triggering Event" shall mean any of the following events: (i) the
consummation of an Initial Public Offering by the Corporation; (ii) a
Non-Surviving Combination; or (iii) a Surviving Combination.
2. DURATION AND EXERCISE OF WARRANT; EXERCISE PRICE; LIMITATION ON
EXERCISE; PAYMENT OF TAXES.
2.1 EXERCISE PRICE. Subject to adjustment pursuant to section 6
hereof, the exercise price per Warrant Share to be purchased hereunder shall be
$6.78 (the "Exercise Price").
2.2 PERIOD OF EXERCISE. This Warrant may be exercised, in whole, or
from time to time in part, only during the period from and after 9:00 A.M., Los
Angeles time, on the first day of July to and including 5:00 P.M., Los Angeles
time, on the 31st day of July in each of the years of 1991, 1992 and 1993 and at
any time from and after July 31, 1993; provided, however, that this Warrant may
also be exercised during the period from 9:00 A.M., New York City time; on the
day on which a Triggering Event first occurs, and to and including 5:00 P.M.,
Los Angeles time, on the earlier of (a) July 31, 1998 and (b) if the Triggering
Event is a sale of all or substantially all of the Corporation's assets, to be
followed by a liquidation of the Corporation, thirty (30) days following such
Triggering Event (the "Expiration Date"). The first day in July 1991, 1992 and
1993 and the day on which a Triggering Event first occurs is herein referred to
as an "Exercise Commencement Date."
2.3 DURATION AND EXERCISE OF WARRANT.
(a) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part by the (a)
surrender of this Warrant, accompanied by the Exercise Form annexed hereto (the
"Exercise Form") duly executed by the Warrantholder of record and specifying the
number of Warrant Shares to be purchased, to the Corporation at the office of
the Corporation located at 3855 Avocado Boulevard, Suite 260, La Mesa,
California 92041 (or such other office or agency of the Corporation as it may
designate by notice to the Warrantholder at the address of such Warrantholder
appearing on the books of the Corporation) during normal business hours on any
day (a "Business Day") other than a Saturday, Sunday or a day on which national
banks are authorized to close in the City of Los Angeles, State of California or
on which the Corporation is otherwise closed for business (a "Nonbusiness Day")
on or after 9:00 A.M., Los Angeles time, on any Exercise Commencement Date but
not later than the close of business on the Expiration Date (or the close of
business on the next succeeding Business Day, if the Expiration Date is a
Nonbusiness Day), and (b) delivery of payment to the Corporation, for the
account of the Corporation, by cash, by certified or bank cashier's check or by
wire transfer, of the Exercise Price for the number of Warrant Shares specified
in the Exercise Form in lawful money of the United States of America. The
Corporation agrees that such Warrant Shares shall be deemed to be issued to the
Warrantholder as the record holder of such Warrant Shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for the Warrant Shares as aforesaid. Certificates for the Warrant
Shares specified in the Exercise Form shall be delivered to the Warrantholder as
promptly as practicable, and in any event within ten (10) Business Days,
thereafter. The certificate or certificates so delivered shall be issued in the
name of the Warrantholder or, if permitted by subsection 2.5 and in accordance
with the provisions thereof, such other name as shall be designated in the
Exercise Form, subject to subsection 2.4, and shall be subject to the
restrictions on transfer and bear the legend specified in subsection 2.5. If
this Warrant shall have been exercised only in part, the Corporation shall, at
the time of delivery of the certificate or certificates for the Warrant Shares,
deliver to the Warrantholder a new Warrant evidencing the rights to purchase the
remaining Warrant Shares, which new Warrant shall in all other respects be
identical with this Warrant. If this Warrant is not exercised prior to the close
of business on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant shall cease to be
exercisable and shall become void and all rights of the Warrantholder hereunder
shall cease. No adjustments or payments shall be made on or in respect of
Warrant Shares issuable on the exercise of this Warrant for any cash
distributions paid or payable to holders of record of shares of Common Stock
prior to the date as of which the Warrantholder shall be deemed to be the record
holder of such Warrant Shares.
(b) No fractional shares of Common Stock shall be issued upon the
exercise of this Warrant. If more than one Warrant shall be exercised at one
time by the same holder, the number of Warrant Shares which shall be issuable
shall be computed on the basis of the aggregate principal amount of the Warrants
so exercised. With respect to any fraction of a share called for upon any
exercise hereof, the Corporation shall pay to the Warrantholder an amount in
cash equal to such fraction multiplied by, the difference between the "closing
price of the Corporation's Common Stock", determined as of the date of exercise
in accordance with subsection 7.5 hereof, and this Warrant's exercise price per
share of Common Stock as of the date of exercise.
2.4 PAYMENT OF TAXES. The initial issuance of a certificate or
certificates, if any, for Warrant Shares upon the exercise of this Warrant shall
be made without charge to the Warrantholder for any securities transfer or other
issuance tax in respect thereto; PROVIDED, HOWEVER, that the Warrantholder shall
be required to pay any and all taxes which may be payable in respect to any
transfer involved in the issuance and delivery of any certificate or
certificates for Warrant Shares in a name other than that of the then
Warrantholder as reflected upon the books of the Corporation.
2.5 TRANSFER RESTRICTIONS AND LEGEND.
(a) This Warrant may not be sold, assigned, pledged,
hypothecated, encumbered, or in any manner transferred or disposed of, in whole
or in part, without the consent of the Corporation except by operation of law
or, in connection with a registration of Warrant Shares under the Securities
Act, to a member firm of the National Association of Securities Dealers, Inc.
Without limiting the generality of the foregoing, neither this Warrant nor any
of the Warrant Shares, nor any interest or participation in either, may be sold,
assigned, pledged, hypothecated, encumbered or in any other manner transferred
or disposed of, in whole or in part, except in compliance with applicable United
States federal and state securities laws and the terms and conditions hereof.
(b) The Warrantholder agrees that prior to any transfer of this
Warrant or any transfer of the related Warrant Shares requiring the consent of
the Corporation under subsection 2.5(a) above, such Warrantholder will give
notice to the Corporation of its intention to effect such transfer (and, in the
case of a disposition, of the intended method of disposition), together with a
copy of the opinion of such Warrantholder's counsel, who shall be acceptable to
the Corporation, as to the necessity or non-necessity for registration under the
Act and applicable state securities laws in connection with such transfer. The
following provisions shall then apply:
(i) If in the opinion of the Warrantholder's counsel, the
proposed transfer of this Warrant or the proposed transfer of such Warrant
Shares may be effected without registration under the Act or applicable state
securities laws of this Warrant or such Warrant Shares, as the case may be, and
if the Corporation's counsel shall deliver an opinion to the Corporation to
substantially the same effect (for purposes of which it may rely on the opinion
of Warrantholder's counsel), then the Warrantholder shall be entitled to
transfer this Warrant or to transfer such Warrant Shares in accordance with the
intended method of disposition specified in the notice delivered by such holder
to the Corporation. The Corporation agrees to request said opinion of its
counsel promptly after receiving each such notice and opinion from the
Warrantholder and to deliver to said holder a copy of the opinion of the
Corporation's counsel promptly after it is received. The Warrantholder shall
cooperate fully, and provide the Corporation and its counsel with such
information and documents as either may reasonably request, to evaluate such
opinion. In the event that no such opinion of the Corporation's counsel (whether
such opinion shall concur with or dissent from said opinion of the
Warrantholder's counsel) shall be delivered to the Warrantholder within 30 days
after the date when the Warrantholder delivered said notice and opinion to the
Corporation, it shall not be necessary that any opinion of the Corporation's
counsel be delivered in order that any action be taken under this subsection,
and the Corporation shall thereafter be obligated in connection with said notice
and opinion of the Warrantholder's counsel to rely upon such Warrantholder's
counsel's opinion and effect such transfer.
(ii) If, in the opinion of either one or of both of said
counsel, either the proposed transfer of this Warrant or the proposed transfer
of such Warrant Shares may not be effected without registration under the
Securities Act or applicable state securities law of this Warrant or such
Warrant Shares, as the case may be, the Warrantholder shall not be entitled to
transfer this Warrant or to transfer such Warrant Shares, as the case may be.
(c) Notwithstanding anything to the contrary contained in this
paragraph 2.5, this Warrant may be transferred in whole or from time to time in
part to any successor to the business of Oppenheimer or any affiliate, officer,
director, employee, parent, subsidiary or partner of Oppenheimer or by operation
of law in compliance with applicable United States federal and state securities
laws and such transfer shall not be subject to the provisions of subsection
2.5(b). Upon due presentation for registration of transfer of this Warrant
pursuant to this subsection 2.5(c), the Corporation shall execute and deliver in
the name of the transferee or transferees a new Warrant or Warrants in like
kind; provided, however, that such new Warrant or Warrants shall not contain the
provisions of this subsection 2.5(c).
(d) In the case of Warrant Shares, each certificate therefor
shall bear a legend to the effect of the foregoing paragraph. Any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a legend
shall also bear such legend unless, in the opinion of counsel for the
Corporation, the Warrant need no longer be subject to the restriction contained
herein. The provisions of this subsection 2.5 shall be binding upon all
subsequent holders of this Warrant, if any. Warrant Shares transferred to the
public as expressly permitted by, and in accordance with, the provisions of this
Warrant shall thereafter cease to be deemed to be "Warrant Shares" for purposes
hereof.
(e) The Warrantholder represents that Warrantholder is acquiring
the Warrant (and, if exercised, the shares of Common Stock issuable upon such
exercise) for the Warrantholder's own account (or a trust account if
Warrantholder is a trustee) and not with a view to or for sale in connection
with any distribution of the securities.
2.6 DIVISIBILITY OF WARRANT. Subject to securities law compliance,
this Warrant may be divided into warrants representing one Warrant Share or
multiples thereof, upon surrender at the principal office of the Corporation on
any Business Day, without charge to the Warrantholder. Upon any such division,
and, if permitted by subsection 2.5 and in accordance with the provisions
thereof, the Warrants may be transferred of record to a name other than that of
the Warrantholder of record; PROVIDED, HOWEVER, that the Warrantholder shall be
required to pay any and all transfer taxes with respect thereto.
2.7 REGISTER. The Corporation shall maintain, at the principal office
of the Corporation (or such other office or agency of the Corporation in
_________________ as it may designate by notice to the holder hereof), a
register for the Warrants, in which the Corporation shall record the name and
address of the person in whose name a Warrant has been issued, as well as the
name and address of each transferee and each prior owner of such Warrant. Within
10 days after any holder of Warrants shall by notice request the same, the
Corporation will deliver to such holder a certificate, signed by a duly
authorized representative, listing the name and address of every other holder of
Warrants as such information appears in said register of the Corporation at the
close of business on the day before such certificate is signed.
3. RESERVATION AND LISTING OF SHARES, ETC.
The Corporation covenants and agrees that all Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be validly issued, fully paid and non-assessable and free from all
taxes, liens, security interests, charges and other encumbrances with respect to
the issue thereof, other than taxes in respect of any transfer occurring
contemporaneously with such issue. The Corporation further covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Corporation will at all times have authorized and reserved,
and keep available free from preemptive rights, a sufficient number of shares of
Common Stock to provide for the exercise of the rights represented by this
Warrant, and will at its expense use its best efforts to procure such listing
thereof (subject to official notice of issuance) as then may be required on all
stock exchanges on which the Common Stock is listed.
4. EXCHANGE, LOSS OR DESTRUCTION OF WARRANT.
If permitted by subsection 2.5 and in accordance with the provisions
thereof, upon surrender of this Warrant to the Corporation with a duly executed
instrument of assignment and funds sufficient to pay any transfer tax, the
Corporation shall, without charge, execute and deliver a new Warrant of like
tenor in the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be cancelled. Upon receipt by the Corporation of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Corporation may reasonably require, and, in the case of
such mutilation, upon surrender and cancellation of this Warrant, the
Corporation will execute and deliver a new Warrant of like tenor. The term
"Warrant" as used herein includes any Warrants issued in substitution or
exchange for this Warrant.
5. OWNERSHIP OF WARRANT.
The Corporation may deem and treat the person in whose name this
Warrant is registered as the Warrantholder and owner hereof (notwithstanding any
notations of ownership or writing hereon made by anyone other than the
Corporation) for all purposes and shall not be affected by any notice to the
contrary, until presentation of this Warrant for registration of transfer as
provided in subsections 2.3 and 2.5 or in section 4.
6. CERTAIN ADJUSTMENTS.
6.1 ADJUSTMENT OF WARRANT SHARES. The number of Warrant Shares
purchasable upon the exercise of this Warrant and the Exercise Price shall be
subject to adjustment as follows:
(a) In case the Corporation shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, (ii) subdivide
its outstanding Shares, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its Shares of Common Stock other securities of the
Corporation (including any such reclassification in connection with a
consolidation or merger in which the Corporation is the surviving entity), the
number of Warrant Shares purchasable upon exercise of this Warrant shall be
adjusted so that the Warrantholder shall be entitled to receive the kind and
number of Warrant Shares or other securities of the Corporation which it would
have owned or have been entitled to receive after the happening of any of the
events described above, had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any adjustment
made pursuant to this subsection (a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for
such event.
(b) Whenever the number of Warrant Shares purchasable upon the
exercise of the Warrant is adjusted, as herein provided, the Exercise Price
payable upon the exercise of this Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, the numerator
of which shall be the number of Warrant Shares purchasable upon the exercise of
the Warrant immediately prior to such adjustment, and the denominator of which
shall be the number of Warrant Shares purchasable immediately thereafter.
(c) Irrespective of any adjustments of the number or kind of
securities issuable upon exercise of Warrants or the Exercise Price, Warrants
theretofore issued may continue to express the same number of Shares and
Exercise Price as are stated in similar Warrants previously issued.
6.2 NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Corporation shall promptly mail by first class, postage prepaid, to all
Warrantholders, notice of such adjustment or adjustments and a certificate of a
firm of independent public accounts selected by the Board of Directors of the
Corporation (which may be the regular accountants employed by the Corporation)
setting forth the number of Warrant Shares and the Exercise Price of such
Warrant Shares after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was made. Such
certificate shall be conclusive evidence of the correctness of such adjustment.
If a dispute shall at any time arise with respect to the failure of the
Corporation to make any adjustments of the Exercise Price or the number of
Warrant Shares issuable pursuant to this Warrant, such dispute shall be
conclusively determined by such accountants. Any such determinations shall be
binding upon the Corporation, all Warrantholders and holders of Warrant Shares
and all other security holders of the Corporation.
6.3 RIGHTS OF WARRANTHOLDERS TO CERTAIN DISTRIBUTIONS. If the
Corporation at any time makes any spin-off, split-up, split-off or distribution
of assets upon or with respect to its shares of Common Stock, as a liquidating
or partial liquidating dividend, spin-off or by way of return of capital, or
other than as a dividend payable out of current earnings, each Warrantholder
shall upon the exercise of the Warrant receive, in addition to the Warrant
Shares then issuable on exercise of the Warrant, the amount of such assets (or
at the option of the Corporation, a sum equal to the value thereof at the time
of the distribution) which would have been payable to such holder had he
exercised the Warrant immediately prior to the record date for such
distribution.
6.4 PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC.
(a) If any capital reorganization or reclassification of any
shares of Common Stock, or consolidation or merger of the Corporation with
another corporation, or the sale of all or substantially all of its assets to
another entity, shall be effected while any Warrants are outstanding in such a
way that holders of any class of Common Stock shall be entitled to receive
stock, partnership interests, securities or assets with respect to or in
exchange for any class of such Common Stock, then as a condition of such
registration, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby each Warrantholder shall thereafter
have the right to receive upon the basis and upon the terms and conditions
specified herein and in lieu of the Warrant Shares immediately theretofore
receivable upon the exercise of such Warrants, such number of shares of stock,
partnership interests, securities or assets to which a holder of the number of
Warrant Shares issuable upon the exercise of such Warrants would have been
entitled upon such reorganization, reclassification, consolidation, merger or
sale, and in any such case appropriate provision shall be made with respect to
the rights and interests of each such Warrantholder to the end that the
provisions hereof shall thereafter be applicable, as nearly as may be, in
relation to any shares of stock, partnership interests, securities or assets
thereafter deliverable upon the exercise of such Warrants. The Corporation shall
not effect any such consolidation, merger or sale unless prior to or
simultaneously with the consummation thereof the survivor or successor limited
partnership or corporation (if other than the Corporation) resulting from such
consolidation or merger or the limited partnership or corporation purchasing
such assets shall assume by written instrument executed and mailed or delivered
to each registered Warrantholder, the obligation to deliver to such
Warrantholder such shares of stock, partnership interests, securities or assets
as, in accordance with the foregoing provisions, such Warrantholder may be
entitled to receive, and containing the express assumption by such successor
limited partnership or corporation of the due and punctual performance and
observance of every provision of this Warrant to be performed and observed by
the Corporation and of all liabilities and obligations of the Corporation
hereunder.
(b) In the event of any change in the rights of the Warrantholder
by reason of other events herein set forth, then and in each such case, the
Corporation will promptly obtain an opinion of Deloitte Haskins & Sells or of
another independent national firm of certified public accountants selected by
the Corporation, specifying the other shares of stock, partnership interests,
securities or assets and the amount thereof receivable as a result of such
change in rights, and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. The Corporation
will promptly mail a copy of such accountants' opinion to the registered
Warrantholder.
7. REDEMPTION.
7.1 In the event that the Warrantholder exercises his or its right to
include any Warrant Shares issuable, but not yet issued, on the exercise hereof
in a registration statement pursuant to section 8 hereof, then the Corporation
may compel the holder of this Warrant to sell [all or portion] of this Warrant
to the Corporation at a price equal to 95% of the difference between "the
closing price of the Corporation's Common Stock" on the date of Redemption
Notice (as hereinafter defined) and the Exercise Price then in effect.
7.2 The Corporation shall give at least 10 days prior written notice
of any requested redemption ("Redemption Notice"), by mail, postage prepaid, to
each Warrantholder of record, Redemption Notice to be addressed to the holder at
the address as it appears on the stock transfer books of the Corporation and to
specify the date of redemption and amount of this Warrant to be redeemed. The
amount of this Warrant specified in such Redemption Notice shall be redeemed
automatically as of the date of redemption without any further action by the
Corporation or such holder and regardless of whether this Warrant is surrendered
to the Corporation or its transfer agent. On or after the date of redemption as
specified in such Redemption Notice, the holder shall surrender this Warrant.
Upon such surrender, the Corporation shall pay to such holder in cash or by
check the price for the [amount of this Warrant so redeemed.] [If less than all
of this Warrant is to be redeemed, the Corporation shall forthwith issue a new
Warrant, of like tenor, for the unredeemed portion of this Warrant.]
7.3 If less than all of the series of Warrants, all of which this
Warrant is one, are to be redeemed, the Warrantholder acknowledges that the
particular Warrants in the series to be redeemed shall be selected by the
Corporation by such method as it shall deem fair and appropriate in its sole and
absolute discretion.
7.4 Notwithstanding that this Warrant has been called for redemption,
this Warrant may be exercised in whole or in part during the periods specified
in subsection 2.2 hereof at any time before the date of redemption specified in
the Redemption Notice.
7.5 For the purpose hereof, the "closing price of the Corporation's
Common Stock" on any Redemption Date shall be the last sale price regular way
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices regular way, in either case on the principal national
securities exchange on the Corporation's Common Stock is listed or admitted to
trading, or if it is not listed or admitted to trading on any national
securities exchange, on the National Market System, as reported by NASDAQ, or if
not admitted to trading on the National Market System, the average of the
closing bid and asked prices in the over-the-counter market as reported by
NASDAQ, or if not so available, the fair market price as determined by the
Corporation's Board of Directors (whose determination shall be conclusive) and
described in an officers' certificate signed by a responsible officer of the
Corporation. For purposes of this subsection the term "trading day" shall not
include any day on which securities are not traded on such exchange or in such
market.
8. REGISTRATION OF THE WARRANTS AND/OR WARRANT SHARES.
8.1 PIGGYBACK REGISTRATION.
If at time after the date hereof, the Corporation proposes to file a
registration statement under the Securities Act with respect to a primary
offering by the Corporation for its own account (other than a "rights offering"
to shareholders of the Corporation) on a form suitable for a secondary offering
and/or a secondary offering on behalf of a shareholder of the Corporation, then
the Corporation will notify each Warrantholder (including for the purpose of
this section 8 any subsequent holder or holders of the Warrants and/or Warrant
Shares) at least thirty (30) days prior to the proposed filing of such
registration statement (the "Corporate Notice"), specifying in the Corporate
Notice the form of registration statement, the number of shares of Common Stock
or other securities which the Company proposes to register, the name of the
managing underwriter or underwriters (if any), (which may be Oppenheimer
pursuant to an existing agreement with the Corporation) and the general terms
and conditions of the proposed registration. Within fifteen (15) days of the
Corporate Notice, any Warrantholder may deliver a notice in writing to the
Corporation (the "Holder Notice") requesting that the Corporation include in
such registration statement some or all of the Warrant Shares. The Corporation
shall include the Warrant Shares in the registration statement, and, if any
proposed sale is to be underwritten, to see that the underwriters purchase such
Warrant Shares. In the event that any registration pursuant to this subsection
shall be, in whole or in part, an underwritten offering of securities of the
Corporation, any request by a Warrantholder pursuant to this subsection to
register the Warrant Shares must specify that such shares are to be included in
the underwriting on the same terms and conditions as the securities, if any,
otherwise being sold through underwriters under such registration; PROVIDED,
HOWEVER, that if the managing underwriter or underwriters of such offering
request in writing, at least fifteen (15) days prior to the date that the
registration statement becomes effective, that part or all of the Warrant Shares
be excluded from the registration statement on the ground that the inclusion of
such Warrant Shares with the securities which the other shareholders and the
Corporation propose to include in such offering will materially adversely affect
the success of the offering or offering price of the Common Stock being sold,
certain of the securities, including such Warrant Shares, will be excluded from
the registration statement as set forth below in this subsection. If the
underwriters agree to purchase any or all of the Warrant Shares, the
Warrantholders will enter into an underwriting agreement with the underwriters
and will sell such Warrant Shares to the underwriters unless and except to the
extent that, upon written notice to the Corporation and the managing underwriter
or underwriters at least two days prior to the effective date of the
registration statement, any such Warrantholder withdraws any portion of such
Warrant Shares. If the underwriters elect to reduce the amount of securities to
be offered and thereby purchase less than all of the Warrant Shares, such
reduction of Warrant Shares to be purchased by the underwriter shall be made pro
rata among the aggregate of Warrant Shares that were included in the timely
requests from Warrantholders under this subsection 8.1 and the shares of other
holders of the Corporation's securities with piggyback registration rights who
exercised their rights to participate in the subject registration statement. To
the extent Warrant Shares held by the Warrantholders are so reduced, such shares
will be excluded from the registration statement. Warrantholders shall have no
right to participate in the selection of the underwriters for the offering
pursuant to this subsection. The rights granted in this subsection 8.1 shall
expire five (5) years after the date hereof.
8.2 DEMAND REGISTRATION.
(a) At any time after the first anniversary of the Corporation's
Initial Public Offering but prior to the fifth anniversary of the date hereof,
any Warrantholder may at any time make a written request ("Demand Registration
Notice") for registration under and in accordance with the Securities Act of all
or part of its Warrant Shares (the "Demand Registration") provided that the
number of Warrant Shares requested to be registered by such Warrantholder shall
equal more than fifty percent (50%) of the aggregate number of Warrant Shares
issued and issuable. In such event, the Corporation shall promptly notify in
writing all other Warrantholders that it has received a Demand Registration
Notice and will, subject to the limitations described herein, include in such
registration all Warrant Shares with respect to which the Corporation has
received written requests for inclusion therein within thirty (30) business days
after receipt by the applicable holder of the notice of the Corporation's
receipt of the Demand Registration Notice. The Warrantholders will be entitled
to one such Demand Registration of such Warrant Shares for which registration
has been properly requested pursuant to this subsection 8.2, except as set forth
below.
The Corporation and all other holders of Common Stock issued and
outstanding or reserved for future issuance pursuant to options, warrants and
conversion privileges as of the date of this Warrant, including, without
limitation, the holders of preferred stock ("Other Shareholders"), will be
permitted to participate in the registration statement filed pursuant to the
Demand Registration. If the Warrantholder or Warrantholders making the Demand
Registration so elect, the offering of Warrant Shares pursuant to such demand
registration will be in the form of an underwritten offering.
In the event that the registration pursuant to this subsection
8.2 shall be in whole or in part an underwritten offering, if the managing
underwriter or underwriters of such offering advise the Corporation in writing
that in its or their opinion the amount of Warrant Shares proposed to be
included in such proposed offering is sufficiently large to materially adversely
affect the success of the offering or offering price of the Common Stock, the
Corporation will include in such registration only an amount of Warrant Shares
which in the opinion of such managing underwriter or underwriters can be sold
without such material adverse effect (the "Maximum Amount"). In such event, the
registration statement shall only include the number of Warrant Shares in the
Maximum Amount, and such amount shall be allocated in the following priority
order: (A) all Warrant Shares that Warrantholders exercising their rights
pursuant to the Demand Registration propose to sell up to the Maximum Amount;
and the balance of the Maximum Amount, if any, to (B) the Corporation and then
to (C) Other Shareholders. All allocations within categories (A), (B) and (C)
above will be made on a pro rata basis among the securities proposed to be
included in such registration by the respective shareholders.
(b) Notwithstanding the foregoing, in the event that the Maximum
Amount represents less than fifty percent (50%) of the aggregate number of
Warrant Shares for which registration has been demanded under subsection 8.2(a),
then the Warrantholders shall be entitled to a second Demand Registration under
the terms and conditions set forth in this subsection 8.2; provided, however,
that the number of shares of Warrant Shares to be registered pursuant to such
second Demand Registration shall be more than fifty percent (50%) of the
aggregate number of Warrant Shares issued and issuable not previously registered
under the Securities Act.
(c) Notwithstanding the obligations set forth in subsections (a)
and (b) above:
(i) The Corporation shall not be required to file any
registration statement which would require the inclusion of audited financial
statements for a period other than the Corporation's fiscal year;
(ii) Should any Warrantholder, upon receiving a Holder
Notice pursuant to subsection 8.1, not exercise his rights to include all of his
Warrant Shares in the registration statement referred to in such Holder Notice,
then such Warrantholder may not submit a Demand Registration Notice pursuant to
this subsection 8.2 until one hundred eighty (180) days after the effective date
of such registration statement.
8.3 MARKET STAND-OFF. Each Warrantholder agrees that if the managing
underwriter or underwriters of the offering contemplated by subsection 8.1 so
request, such Warrantholder shall not sell any Requested Shares (as hereinafter
defined) or other Warrant Shares held by him not included in the registration
statement for a period of sixty (60) days after the effective date of the
registration statement filed in connection with the public offering; PROVIDED,
HOWEVER, that no Warrantholder shall be bound by this subsection 8.3 if none of
such Warrantholder's Warrant Shares have been included in the registration
statement filed pursuant to subsection 8.1.
8.4 OBLIGATIONS OF THE CORPORATION. When required under this section 8
to effect the registration of any of the Warrant Shares under subsections 8.1 or
8.2 hereof (in either such case, the "Requested Shares"), the Corporation shall,
as expeditiously as is reasonably possible:
(a) Prepare and file with the Securities Exchange Commission (the
"SEC") a registration statement with respect to such Requested Shares and such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to cause such registration
statement to become effective at the earliest practicable date and to remain
effective for a period of ninety (90) days or until the Warrantholders and any
underwriter purchasing such Requested Shares have sold or otherwise disposed of
the Requested Shares registered in such registration statement, whichever is
earlier.
(b) Furnish to each Warrantholder selling Requested Shares such
number of copies of such registration statement, each supplement and amendment
thereto, a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as such
Warrantholder may from time to time reasonably request in order to facilitate
the disposition of Requested Shares to be sold by such Warrantholder pursuant to
such registration statement.
(c) Register and qualify the Requested Shares covered by such
registration statement under such securities laws or state securities laws of
such jurisdictions as shall be reasonably appropriate for the distribution of
the Requested Shares covered by the registration statement; PROVIDED, HOWEVER,
that the Corporation shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(d) Furnish, at the request of any Warrantholder or
Warrantholders requesting registration of Requested Shares pursuant to this
section 8 on the date that such Requested Shares are delivered to the
underwriters for the sale pursuant to such registration or, if such Requested
Shares are not being sold through underwriters, on the date the registration
statement with respect to such Requested Shares becomes effective: (1) an
opinion, dated such date, of the counsel representing the Corporation for the
purposes of such registration, addressed to the underwriters, if any, and to the
Warrantholder or Warrantholders making such request, stating that such
registration statement has become effective under the Securities Act and that
(a) to the best knowledge of such counsel, no stop order suspending the
effectiveness thereof as has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Securities Act;
(b) the registration statement, the related prospectus, and each amendment or
supplement thereto, comply as to form in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the SEC thereunder (except that such counsel need express no opinion as to
financial statements contained therein); (c) such counsel has no reason to
believe that either the registration statement or the prospectus, or any
amendment or supplement thereto, contains any untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; (d) to the best
knowledge of such counsel, the descriptions in the registration statement and
the prospectus, and any amendment or supplement thereto, of legal and
governmental matters and all contracts and other legal documents or instruments
are accurate and fairly present the information required to be shown; and (e)
such counsel does not know of any legal or governmental proceedings, pending or
contemplated, required to be described in the registration statement or
prospectus, or any amendment or supplement thereto, that are not described as
required, nor of any contracts or documents or instruments of a character
required to be described in the registration statement or prospectus or any
amendment or supplement thereto or to be filed as exhibits to the registration
statement that are not described and filed as required; and (2) a letter, dated
such date, from the independent public accountants of the Corporation, addressed
to the underwriters, if any, and to the Warrantholder or Warrantholders making
such request, stating that they are independent public accountants within the
meaning of the Securities Act and that, in the opinion of such accountants, the
financial statements and other financial data of the Corporation included in the
registration statement and the prospectus, and any amendment or supplement
thereto, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act. Such letter from the independent
certified public accountants shall additionally cover such other financial
matters (including information as to the period ending not more than five
business days prior to the date of such letter) with respect to the registration
in respect of which such letter is being given as the Warrantholder or
Warrantholders of Requested Shares requesting such letter may reasonably
request.
(e) Effect any notification registration, qualification and
listing on a securities exchange which shall be reasonably necessary to permit
the sale of such Requested Shares, if the Common Stock is then being traded on
an exchange.
8.5 EXERCISE OF WARRANT. Nothing herein shall require a Warrantholder
holding any Warrants to have exercised any of its Warrants prior to making a
request under subsections 8.1 or 8.2 hereof for registration of shares of Common
Stock issuable upon the exercise of such Warrants; provided, however, that such
Warrants must be exercised not later than the date of the effectiveness of the
registration statement covering the shares of Common Stock issuable upon
exercise thereof, or such earlier date as shall be reasonably required by the
managing underwriter(s) in an underwritten offering. Nothing herein shall
require the Corporation to register the Warrants under the Securities Act or any
state securities law. Upon the exercise of this Warrant, any and all
registration rights granted in this section 8 shall survive and the holder of
Warrant Shares acquired upon exercise hereof, shall be entitled to the rights
granted herein with respect to such Warrant Shares.
8.6 FURNISH INFORMATION. It shall be a condition precedent to the
obligation of the Corporation to take any action pursuant to this section 8 that
the Warrantholders promptly furnish to the Corporation such information
regarding them, the securities of the Corporation held by them and the intended
method of disposition of such securities as the Corporation shall reasonably
request and as shall be required in connection with the Corporation's
obligations under this section.
8.7 REGISTRATION EXPENSES. All expenses incurred by the Corporation in
complying with this section 8, including without limitation, all registration
and filing fees, printing expenses, travel expenses, fees and disbursements of
counsel for the Corporation and the expense of any special audits incident to or
required by any such registration, shall be paid by the Corporation. The
Corporation shall not be responsible for any underwriters' fees, brokerage fees,
underwriting discounts and commissions with respect to such registration of the
Requested Shares, or the counsel fees incurred by Warrantholders.
8.8 EXPANDED RIGHTS. From and after the fifth anniversary of this
Warrant, section 8 shall be extended through July 31, 1998 with the following
modifications:
(a) The last sentence of subsection 8.1 shall be deleted.
(b) The Warrantholders shall have the right to make two demands
for registration of the Warrant Shares, after the fifth anniversary of this
Warrant, under subsection 8.2(a). Subsection 8.2(b) shall be deleted. Upon
demand for registration of the Warrant Shares pursuant to subsection 8.2(a),
subsection 8.7 shall be amended to include the following:
(i) The expenses of registering the Warrant Shares upon the
first Demand Registration shall be borne by the Corporation.
(ii) HOWEVER, the expenses of registering the Warrant Shares
upon the second Demand Registration shall be borne by the Warrantholders.
8.9 INDEMNIFICATION. In the event any of the Warrant Shares of a
Warrantholder is included in a registration statement pursuant to this section
8:
(a) To the extent permitted by law, the Corporation will
indemnify and hold harmless each Warrantholder selling Requested Shares, any
underwriter (within the meaning of the Securities Act) with respect to the
Requested Shares, and each officer and director of and each person, if any, who
otherwise controls such Warrantholder or underwriter within the meaning of the
Securities Act, against any losses, claims, damages, expenses, or liabilities,
joint or several, to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue or
allegedly untrue statement of any material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or allegedly necessary to make the statements therein not
misleading; and will reimburse each such Warrantholder, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this section 8 shall not apply to amounts paid in settlement of any such
loss, claim, damage, expense, liability or action if such settlement is effected
without the written consent of the Corporation which shall not be unreasonably
withheld, nor shall the Corporation be liable under this section 8 to such a
Warrantholder, underwriter or controlling person for any such loss, claim,
damage, expense, liability or action to the extent that it arises out of, or is
based upon, an untrue statement or allegedly untrue statement or omission or
alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus, or amendments or supplements thereto,
in reliance upon and in conformity with information furnished in writing
expressly for use in connection with such registration by such Warrantholder,
such underwriter or such controlling person.
(b) To the extent permitted by law, each Warrantholder selling
Requested Shares pursuant to this section 8 will indemnify and hold harmless the
Corporation, each of its directors and officers, each person, if any, who
controls the Corporation within the meaning of the Securities Act, and any
underwriter for the Corporation (within the meaning of the Securities Act)
against any losses, claims, damages or liabilities to which the Corporation or
any such person or underwriter may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages, expenses or liabilities (or
actions in respect thereto) arise out of, or are based upon, any untrue or
allegedly untrue statement of any material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or allegedly necessary to make the statements therein not
misleading, in each case to the extent that such untrue statement or allegedly
untrue statement or omission or alleged omission was made in such registration
statement, preliminary prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with information furnished in writing by such
Warrantholder expressly for use in connection with such registration; PROVIDED,
HOWEVER, that the indemnity agreement contained in this section 8 shall not
apply to amounts paid in settlement of any such loss, claim, damage, expense,
liability or action if such settlement is effected without the written consent
of such Warrantholder which shall not be unreasonably withheld; and each such
Warrantholder will reimburse the Corporation or any such person or underwriter
for any legal or other expenses reasonably incurred by the Corporation or any
such person or underwriter in connection with investigating or defending any
such loss, claim, damage, liability, expense or action.
(c) Promptly after receipt by an indemnified party under this
section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this section 8 notify the indemnifying party in writing of the
commencement thereof and generally summarize such action. The indemnifying party
shall have the right to participate in and to assume the defense thereof with
counsel mutually satisfactory to the parties; PROVIDED that each indemnified
party shall have the right to employ its own counsel in any such cash, but the
fees and expense of such counsel shall be at the expense of such indemnified
party unless the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such action
or the indemnifying party shall not have employed counsel to have charge of the
defense of such action or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them that are
different from or additional to those available to the indemnifying party (in
which case the indemnifying party shall not have the right to direct the defense
of such action on behalf of the indemnified party or parties) in any of which
events the fees and expenses of such counsel shall be borne by the indemnifying
parties. The failure to notify an indemnifying party promptly of the
commencement of any such action if prejudicial to the ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this subsection (g), but the omission so to notify the
indemnifying party will not relieve such party of any liability that such party
may have to any indemnified party otherwise than under this section.
(d) To the extent permitted by law, the indemnification provided
for under this Warrant will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling person (within the meaning of the Securities Act) of
such indemnified party and will survive the transfer of securities.
(e) If for any reason the foregoing indemnity is unavailable to,
or is insufficient to hold harmless, an indemnified party, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party as
a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, or provides a lesser sum to the indemnified party then the
amount hereinafter calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnifying party on the one
hand and the indemnified party on the other but also the relative fault of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations. Notwithstanding the foregoing, no underwriter, if any,
shall be required to contribute any amount in excess of the amount by which the
total price at which the securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The obligation of any underwriters
to contribute pursuant to this subsection (e) shall be several in proportion to
their respective underwriting commitments and not joint.
(f) As used in this section 8, the term "Person" shall mean an
individual, partnership, corporation, joint venture, association, stock company,
trust or unincorporated organization, or a government or agency or political
subdivision thereof.
8.10 NO-ACTION LETTER OR OPINION OF COUNSEL IN LIEU OF REGISTRATION.
Notwithstanding anything else contained in this section 8, in the event that (i)
the Corporation shall have obtained from the SEC an "interpretative" or a
"no-action" letter in which the SEC has indicated that registration is not
required or that it will take no action if, without registration under the
Securities Act, any Warrantholder disposes of Requested Shares in the manner in
which such Warrantholder proposes to dispose of the Requested Shares, or (ii) in
the opinion of counsel for the Corporation, no registration under the Securities
Act is required in connection with such disposition, the Requested Shares shall
not be eligible for registration under this section, but if the Corporation
Holder receives a contrary opinion of its counsel, the Corporation will either
allow such shares to be registered pursuant to this Section 8 and reimburse the
Warrantholder for the reasonable costs of obtaining such opinion or obtain a
no-action letter from the SEC.
8.11 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Warrantholder may
participate in any underwritten registration hereunder unless such Warrantholder
(a) agrees to sell such Warrantholder's securities on the basis provided in any
underwriting arrangements approved by the Corporation and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.
9. PRIOR NOTICE OF CERTAIN EVENTS. In case at any time:
(a) the Corporation shall pay any dividends or make any
distribution to its holders of shares of Common Stock;
(b) the Corporation proposes to make the Initial Public Offering;
or
(c) there shall be any capital reorganization or reclassification
of the shares of Common Stock of the Corporation, including any subdivision,
split, combination or reverse split, or any consolidation or merger of the
Corporation with another corporation or a sale of all or substantially all of
its assets; or
(d) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation; then, in any of said cases, the
Corporation shall give prior written notice, by first-class mail, postage
prepaid, addressed to the Warrantholder at the address of such Warrantholder as
shown on the registration books of the Corporation, of the date on which (i) the
books of the Corporation shall close or a record shall be taken for such
distribution or subscription rights, or (ii) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up shall take place, as the case may be, or (iii) the registration
statement is expected to become effective. To the extent applicable, such notice
shall also specify the date as of which the Corporation's shareholders shall
participate in said distribution or subscription rights or shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger or
sale, dissolution, liquidation or winding-up, as the case may be. Such written
notice shall be given at least fifteen (15) days prior to (i) such applicable
event, (ii) the applicable record date or (iii) the date on which the
Corporation's transfer books are closed in respect thereto.
In addition to the foregoing, the Corporation shall promptly
notify Warrantholders in writing, by first class mail, postage prepaid, of the
first occurrence of a Triggering Event and such notice shall set forth the
number of shares of Common Stock outstanding on such date, excluding any shares
of Common Stock which are issued in connection with such Triggering Event.
10. MISCELLANEOUS.
10.1 ENTIRE AGREEMENT. This Warrant constitutes the entire agreement
between the Corporation and the Warrantholders with respect to the Warrants and
Warrant Shares.
10.2 BINDING EFFECTS; BENEFITS. This Warrant shall inure to the
benefit of and shall be binding upon the Corporation, the Warrantholders and
holders of Warrant Shares and their respective heirs, legal representatives,
successors and assigns. Nothing in this Warrant, expressed or implied, is
intended to or shall confer on any person other than the Corporation, the
Warrantholders and holders of Warrant Shares, or their respective heirs, legal
representatives, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Warrant or the Warrant Shares.
10.3 AMENDMENTS AND WAIVERS. This Warrant may not be modified or
amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. The
Corporation, any Warrantholder or holders of Warrant Shares may, by an
instrument in writing, waive compliance by the other party with any term or
provision of this Warrant on the part of such other party hereto to be performed
or complied with. The waiver by any such party of a breach of any term or
provision of this Warrant shall not be construed as a waiver of any subsequent
breach.
10.4 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
10.5 FURTHER ASSURANCES. Each of the Corporation, the Warrantholders
and holders of Warrant Shares shall do and perform all such further acts and
things and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
10.6 NOTICES. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States first class mail, postage prepaid, to the parties hereto at the
following addresses or to such other address as any party hereto shall hereafter
specify by notice to the other party hereto:
(a) if to the Corporation, addressed to:
-------------------------------
-------------------------------
-------------------------------
With a copy given in the same manner to:
-------------------------------
-------------------------------
-------------------------------
(b) if to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person appearing on the books of the
Corporation.
Except as otherwise provided herein, all such demands, requests, notices and
other communication shall be deemed to have been received on the date of
delivery thereof or on the third Business Day after the mailing thereof.
10.7 SEPARABILITY. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
10.8 RIGHTS OF THE WARRANTHOLDER. The Warrantholder shall not, solely
by virtue of this Warrant, be entitled to any rights of a shareholder of the
Corporation, either at law or in equity.
10.9 GOVERNING LAW. This Warrant shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be governed
by and construed and enforced in accordance with the laws of such State.
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
signed by its duly authorized officer.
CORPORATION
By:_______________________
Dated: ___________________
<PAGE>
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby irrevocably
elects to exercise the right, represented by this Warrant, to purchase _______
of the Warrant Shares, and to become a shareholder of
________________________________, and herewith tenders payment for such Warrant
Shares in the amount of $____________ in accordance with the terms of this
Warrant. The undersigned requests that a certificate for such Warrant Shares be
registered in the name of __________________________ and that such certificates
be delivered to _____________________ whose address is
____________________________________.
Signature: _______________________
Date ______________________
Exhibit 5
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10028
Phone 212 806-5400
March 24, 2000
Alliance Pharmaceutical Corp.
3040 Science Park Road
San Diego, CA 92121
Re: ALLIANCE PHARMACEUTICAL CORP. REGISTRATION STATEMENT ON FORM S-3
----------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Alliance Pharmaceutical Corp., a New York
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), of a Registration Statement on
Form S-3 (the "Registration Statement"), relating to 4,588,483 shares of Common
Stock of the Company, par value $0.01 per share (the "Shares"), to be issued
upon the conversion of the Company's 5% subordinated convertible debentures, 6%
subordinated convertible notes, Series D Preferred Stock, upon the exercise of
warrants as set forth in the Selling Shareholders section of the Registration
Statement, and upon the proposed sale of Shares by the selling shareholders as
set forth in such section of the Registration Statement (the "Selling
Shareholders"). The Shares are to be sold from time to time as set forth in the
Registration Statement, the prospectus contained therein and any amendments or
supplements thereto.
As such counsel, we have examined copies of the Amended Certificate of
Incorporation and Bylaws of the Company, each as in effect as of the date
hereof, and the Registration Statement. We also have examined the original or
reproduced or certified copies of all such records of the Company, all such
agreements, certificates of officers and representatives of the Company and
others, and such other documents, papers, statutes and authorities as we deemed
necessary to form the basis of the opinions hereinafter expressed. In such
examinations, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of copies of documents supplied to us by the Company and
others. As to certain matters of fact relevant to the opinions hereinafter
expressed, we have relied upon statements and certificates of officers of the
Company and others.
Attorneys involved in the preparation of this opinion are admitted to practice
law in the State of New York and we do not purport to be experts on, or to
express any opinion herein concerning, any law other than the laws of the State
of New York and the federal laws of the United States of America.
Based upon and subject to the foregoing, we are of the opinion that the Shares
to be offered by the Selling Shareholders, when sold under the circumstances
contemplated in the Registration Statement, will be legally issued, fully paid
and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the prospectus forming a
part of the Registration Statement. In giving such consent, we do not admit
hereby that we come within the category of persons whose consent is required
under Section 7 of the Securities Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
/s/ Stroock & Stroock & Lavan LLP
STROOCK & STROOCK & LAVAN LLP
Exhibit 23.(b)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Alliance
Pharmaceutical Corp. for the registration of shares of its common stock and to
the incorporation by reference therein of our report dated July 23, 1999, except
for paragraph 2 of Note 5, as to which the date is September 14, 1999, with
respect to the consolidated financial statements of Alliance Pharmaceutical
Corp. included in its Annual Report on Form 10-K for the year ended June 30,
1999, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
San Diego, California
March 21, 2000
