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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) DECEMBER 8, 1995
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CORTEX PHARMACEUTICALS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-17951 33-0303583
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No)
15241 BARRANCA PARKWAY, IRVINE, CALIFORNIA 92718
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 727-3157
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
Page 1 of 35
Exhibit Index on Page 4
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ITEM 5. OTHER EVENTS
ISSUANCE OF SERIES C PREFERRED STOCK
On December 8, 1995, Cortex Pharmaceuticals, Inc. (the "Company") issued 160
shares of newly created Series C Preferred Stock, at a price of $25,000 per
share, for an aggregate of $4,000,000. The shares were sold to 12 offshore
investors pursuant to Regulation S. The Series C Preferred Stock is
convertible, commencing January 20, 1996 into Common Stock at an effective
conversion price of the lower of (i) $2.825 per share of Common Stock or (ii)
85% of the fair market value of the Common Stock on the date of conversion based
on the average bid price during the five trading days prior to the date of
conversion. Based on the $2.825 conversion price, all of the Series C Preferred
Stock is convertible into an aggregate of 1,415,929 shares of Common Stock. At
any time the fair market value of the Common Stock is less than $3.32 per
share, the effective conversion price will be less than $2.825 and the Series C
Preferred Stock will be convertible into a larger number of shares of Common
Stock.
In connection with the placement the Company paid to Swartz Investments, Inc.
commissions of $360,000 and a non-accountable expense allowance of $40,000. In
addition, the Company issued to Swartz Investments, Inc. a five year warrant to
purchase 106,195 shares of the Company's Common Stock at an exercise price of
$2.82. The Common Stock issuable on exercise of the warrant and on conversion
of the Series C Preferred Stock (if not otherwise freely tradeable) is subject
to a Registration Rights Agreement.
ITEM 7. EXHIBITS
Exhibits:
3.1 Restated Certificate of Incorporation dated April 11, 1989, as amended
on June 27, 1989, April 29, 1991, May 1, 1991, May 22, 1991, November
12, 1992, January 11, 1995 and December 8, 1995
4.1 Form of Subscription Agreement entered into with each investor.
4.2 Form of Registration Rights Agreement dated December 8, 1995.
4.3 Warrant to Purchase 106,195 shares issued to Swartz Investments, Inc.
20.1 Press Release dated December 12, 1995
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORTEX PHARMACEUTICALS, INC.
Date: December 21, 1995 By: /s/ D. SCOTT HAGEN
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D. Scott Hagen
Acting President and Chief Operating
Officer
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EXHIBIT INDEX
SEQUENTIAL
EXHIBITS DESCRIPTION PAGE NO.
-------- ----------- ----------
3.1 Restated Certificate
of Incorporation
dated April 11, 1989,
as amended on June 27,
1989, April 29, 1991,
May 1, 1991, May 22,
1991, November 12,
1992, January 11, 1995
and December 8, 1995
4.1 Form of Subscription
Agreement entered into with
each investor.
4.2 Form of Registration Rights Agreement dated
December 8, 1995.
4.3 Warrant to Purchase 106,195
shares issued to Swartz Investments,
Inc.
20.1 Press Release dated December 12, 1995
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RESTATED CERTIFICATE OF INCORPORATION
OF
CORTEX PHARMACEUTICALS, INC.,
a Delaware corporation
CORTEX PHARMACEUTICALS, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware, does hereby certify
that:
(1) The name of the corporation is Cortex Pharmaceuticals, Inc. (the
"Corporation"). The Corporation was originally incorporated under the name
X-Age, Inc., and the original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of the State of Delaware on February 10,
1987.
(2) This Restated Certificate of Incorporation restates and
integrates and does not further amend the provisions of the Certificate of
Incorporation of the Corporation, as heretofore amended or supplemented, and
there is no discrepancy between those provisions and the provisions of this
Restated Certificate of Incorporation.
(3) The text of the Restated Certificate of Incorporation, as
heretofore amended or supplemented, is hereby restated to read in its entirety
as follows:
"FIRST: The name of this corporation is Cortex Pharmaceuticals, Inc.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered
agent at that address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: (A) (1) The aggregate number of shares which the Corporation
shall have authority to issue is 35,000,000, of which 5,000,000 shares of the
par value of $.001 per share shall be designated "Preferred Stock" and
30,000,000 shares of the par value of $.001 per share shall be designated
"Common Stock."
(2) Authority is hereby expressly granted to the Board of Directors
from time to time to issue the Preferred Stock as Preferred Stock of any series
and, in connection with the creation of each such series, to fix by the
resolution or resolutions providing for the issue of shares thereof, the number
of shares of such series and the designations, powers, preferences, rights,
qualifications, limitations, and restrictions of such series, to the full extent
now or hereafter permitted by the laws of the State of Delaware.
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(B) 9% CUMULATIVE CONVERTIBLE PREFERRED STOCK
A series of Preferred Stock, consisting of 1,250,000 shares of the
authorized but unissued Preferred Stock of the Corporation is hereby created.
The designation, powers, preferences, rights, qualifications, limitations, and
restrictions of this series, are as follows:
(1) DESIGNATION OF SERIES. The designation of the series of
preferred stock created hereby shall be 9% Cumulative Convertible Preferred
Stock, par value .001 per share (the "9% Preferred Stock"). The shares of the
9% Preferred Stock shall be fully-paid and nonassessable.
The number of shares of 9% Preferred Stock may be decreased (but not
below the number of shares then outstanding) or increased by a certificate
executed, acknowledged, filed, and recorded in accordance with the General
Corporation Law of the State of Delaware setting forth a statement that a
specified decrease or increase, as the case may be, thereof had been authorized
and directed by a resolution or resolutions adopted by the Board of Directors
pursuant to authority expressly vested in it by the provisions of the
certificate of incorporation of the Corporation.
(2) DIVIDENDS. The fixed dividend rate for the 9% Preferred Stock
shall be $.09 per share per annum, and no more, and dividends shall be
cumulative from June 15, 1989 payable in equal semiannual amounts on the
fifteenth day of June and December in each year for the semiannual dividend
periods ending respectively on the dates immediately preceding such dates,
commencing on June 15, 1989.
(3) CONVERSION. The holders of shares of 9% Preferred Stock shall
have the right, at their option, to convert such shares into shares of Common
Stock at any time on the following terms and conditions:
(a) Each share of 9% Preferred Stock shall be convertible at the
option of the holder thereof at the office of the Corporation or at the office
of the transfer agent, if any, for the 9% Preferred Stock into shares of duly
authorized, fully paid, and non-assessable shares of Common Stock at the
conversion price of $1.50 per share of Common Stock (the "Conversion Rate"),
subject to adjustment as provided in Section (B)(3)(c) of this Article FOURTH.
The number of shares of Common Stock to be delivered upon conversion of the 9%
Preferred Stock shall be determined by dividing the liquidation amount ($1.00
per share) of the shares surrendered by the Conversion Rate at the time of
surrender, calculated to the nearest 1/100th of a share (fractions of less than
1/100 being disregarded). The Corporation shall make no payment or adjustment
on the account of any unpaid cumulative dividends on the shares of 9% Preferred
Stock surrendered for conversion or on account of any dividends on the Common
Stock. In case of the call for redemption by the Corporation of any shares of
9% Preferred Stock, such right of conversion shall cease and terminate, as to
the shares designated for redemption, from and after the dates specified for
redemption pursuant to the provisions of Section (B)(5) of this Article FOURTH.
(b) Before any holder of shares of 9% Preferred Stock shall be
entitled to convert the same into Common Stock, he shall surrender the
certificate or certificates therefor,
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duly endorsed, at the office of the Corporation or the transfer agent therefor,
if any, and shall give written notice to the Corporation that he elects to
convert all or part of the shares represented by the certificate or certificates
and shall state in writing therein the name or names in which he wishes the
certificate or certificates for Common Stock to be issued. The Corporation
will, as soon as practicable thereafter, issue and deliver to such holder of
shares of 9% Preferred Stock, or to his nominee or nominees, certificates for
the number of full shares of Common Stock to which he shall be entitled as
aforesaid, together with cash in lieu of any fraction of a share as hereinafter
provided. If surrendered certificates for 9% Preferred Stock are converted only
in part, the Corporation will issue and deliver to the holder, or to his nominee
or nominees, a new certificate or certificates representing the aggregate of the
unconverted shares of 9% Preferred Stock. Shares of 9% Preferred Stock shall be
deemed to have been converted as of the date of the surrender of such shares for
conversion as provided above, and the person or persons entitled to receive the
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such Common Stock on such date.
(c) The Conversion Rate shall be subject to adjustment as
follows:
(i) In case the Corporation shall (w) pay a dividend or
make a distribution on its outstanding shares of Common Stock in shares of
its capital stock (whether shares of its Common Stock or of capital stock
of any other class), (x) subdivide its outstanding shares of Common Stock,
(y) combine its outstanding shares of Common Stock into a smaller number of
shares, or (z) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Corporation, the Conversion Rate in effect
immediately prior to such action shall be adjusted so that the holder of
any shares of 9% Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number of shares of capital stock of the
Corporation which he would have owned immediately following such action had
such shares of 9% Preferred Stock been converted immediately prior thereto.
An adjustment made pursuant to this subsection (i) shall become effective
retroactively immediately after the record date in the case of a dividend
or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination, or reclassification.
(ii) In case the Corporation shall issue to holders of
shares of its outstanding Common Stock generally any rights, options, or
warrants entitling them to subscribe for or purchase (w) shares of its
Common Stock, (x) any assets of the Corporation, (y) any securities of the
Corporation (except its Common Stock) or of any corporation other than the
Corporation, or (z) any rights, options, or warrants entitling them to
subscribe for or to purchase any of the foregoing securities, whether or
not such rights, options, or warrants are immediately exercisable
(hereinafter collectively called a "Distribution on Common Stock"), the
Corporation shall issue to the holders of outstanding shares of 9%
Preferred Stock the Distribution on Common Stock to which they would have
been entitled if they had converted the shares of 9% Preferred Stock held
by them into Common Stock immediately prior to the record date for the
purpose of determining stockholders entitled to receive such Distribution
on Common Stock.
(d) DE MINIMUS CHANGES. No adjustment in the Conversion Rate
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the
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Conversion Rate; provided, however, that any adjustments which by reason of this
Section (B)(3)(d) of this Article FOURTH are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under Section (B)(3)(c) of this Article FOURTH shall be made to the
nearest cent or to the nearest one hundredth of a share, as the case may be.
(e) NOTICE OF ADJUSTMENT. Whenever the Conversion Rate is
adjusted, as herein provided, the Corporation shall promptly cause a notice
setting forth the adjusted Conversion Rate to be mailed to the holders of the 9%
Preferred Stock.
(f) NO FRACTIONAL SHARES TO BE ISSUED. No fractional shares or
scrip representing fractional shares of Common Stock shall be issued upon
conversion of 9% Preferred Stock. Instead of any fractional share of Common
Stock which would otherwise be issuable upon conversion of 9% Preferred Stock
(or specified portions thereof), the Corporation shall pay in cash to the
holders of such 9% Preferred Stock in respect of such fraction of a share an
amount equal to the same fraction of the fair market value per share of Common
Stock as determined by the Board of Directors in its sole discretion.
(g) EFFECT OF SALE, MERGER, OR CONSOLIDATION. In the event of
any capital reorganization of the Corporation, or of any reclassification (other
than a change in par value) of the Common Stock, or of any conversion of the
Common Stock into securities of another corporation, or the consolidation of the
Corporation with, or the merger of the Corporation into, any other corporation
where the Corporation is not the surviving corporation or in the event of the
sale of all or substantially all of the properties and assets of the Corporation
to any other corporation (each such event hereinafter being referred to as a
"Capital Change"), a share of 9% Preferred Stock shall be convertible after such
Capital Change, upon the terms and conditions herein specified, for the number
of shares of stock or other securities or property of the Corporation, or of the
corporation into which shares of Common Stock are converted or resulting from
such consolidation or surviving such merger or to which such sale shall be made,
as the case may be, to which the shares of Common Stock issuable (at the time of
such Capital Change) upon conversion of such share of 9% Preferred Stock would
have been entitled upon such Capital Change. In any such case, if necessary,
the provisions set forth in this Section (B)(3) of Article FOURTH with respect
to the rights and interests thereafter of the holders of the 9% Preferred Stock
shall be appropriately adjusted so as to be reasonably applicable to any shares
of stock or other securities or property thereafter deliverable on the
conversion of the 9% Preferred Stock. The subdivision or combination of shares
of Common Stock at any time outstanding into a greater or lesser number of
shares of Common Stock shall not be deemed to be a reclassification of the
Common Stock for the purpose of this Section (B)(3)(g) of this Article FOURTH.
The Corporation shall not effect any consolidation, merger, or sale resulting in
a Capital Change, unless prior to or simultaneously with the consummation
thereof, any successor corporation or corporation purchasing such assets shall
assume, by written instrument, the obligation to deliver to the holder of each
share of 9% Preferred Stock such shares of stock, securities, or assets as the
holders of 9% Preferred Stock may be entitled to receive upon exercise of the 9%
Preferred Stock in accordance with the foregoing provisions, and the other
obligations of the Corporation hereunder.
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(h) NOTICE OF RECLASSIFICATION OR RECAPITALIZATION, ETC.
In case:
(i) the Corporation shall authorize the issuance to all
holders of Common Stock of rights or warrants to subscribe for or purchase
shares of its capital stock or of any other right;
(ii) the Corporation shall authorize the distribution to
all holders of Common Stock of evidences of its indebtedness or assets or
the change or adoption of a dividend policy;
(iii) of any subdivision, combination, or reclassification
of Common Stock, or of any consolidation or merger to which the Corporation
is a party and for which approval of any stockholders of the Corporation is
required, or of the sale or transfer of all or substantially all of the
assets of the Corporation; or
(iv) of the voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation;
then the Corporation shall mail to the holders of 9% Preferred Stock at least 10
days prior to the applicable record date hereinafter specified in clauses (x)
and (y) below, a notice stating (x) the date as of which the holders of Common
Stock of record to be entitled to receive any such rights, warrants, or
distribution are to be determined, or (y) the date on which any such
subdivision, combination, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up, or other action is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their Common Stock for securities
or other property, if any, deliverable upon such subdivision, combination,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation, winding up, or other action. The failure to give the notice
required by this Section (B)(3)(h) of this Article FOURTH or any defect therein
shall not affect the legality or validity of any distribution, right, warrant,
subdivision, combination, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up, or other action, or the vote
upon any of the foregoing.
(i) RESERVATION OF SHARES FOR ISSUANCE UPON CONVERSION. The
Corporation covenants that it will at all times reserve and keep available out
of its authorized Common Stock, free from preemptive rights, solely for the
purpose of issuance upon conversion of the 9% Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of the 9% Preferred Stock. The
Corporation covenants that all shares of Common Stock which shall be so issuable
upon conversion of the 9% Preferred Stock as herein provided shall, when issued,
be duly authorized, validly issued, and fully paid and nonassessable, free of
all liens and charges and not subject to preemptive rights and that, upon
conversion of the 9% Preferred Stock, the appropriate capital stock accounts of
the Corporation shall be duly credited.
(j) PAYMENT OF TAXES ON SHARES ISSUED UPON CONVERSION. The
issuance of certificates for shares of Common Stock upon the conversion of
shares of the 9%
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Preferred Stock shall be made without charge to the converting holders for any
tax in respect of the issuance of such certificates and such certificates shall
be issued in the respective names of, or in such names as may be directed by,
the holders of the shares of the 9% Preferred Stock converted; provided,
however, that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
such certificate in a name other than that of the shares of the 9% Preferred
Stock converted, and the Corporation shall not be required to issue or deliver
such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Corporation the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
(4) REDEMPTION OF 9% PREFERRED STOCK BY HOLDERS
(a) RIGHT TO REDEEM 9% PREFERRED STOCK. Subject to and upon
compliance with the provisions of this Section (B)(4) of this Article FOURTH, at
any time during the six-month period following the date of the written notice
referred to in Section (B)(4)(c) of this Article FOURTH, the holder of shares of
9% Preferred Stock shall have the option, but not the obligation, to require the
Corporation to redeem his shares of 9% Preferred Stock at a price of $1.00 per
share of 9% Preferred Stock to be redeemed. A holder of shares of 9% Preferred
Stock wishing to require the Corporation to redeem such shares shall surrender
the shares which are to be so redeemed to the Corporation or to such agent as
may be appointed by the Corporation for such purpose at any time during such
six-month period during usual business hours accompanied by a written notice of
election to redeem and, if so required by the Corporation, by a written
instrument or instruments of transfer in form satisfactory to the Corporation
duly executed by the holder or his attorney duly authorized in writing.
(b) PAYMENT OF REDEMPTION PRICE. As promptly as practicable
after the surrender, as herein provided, of shares of 9% Preferred Stock for
redemption, the Corporation shall pay or cause to be paid to or upon the written
order of the holder of the shares of 9% Preferred Stock so surrendered an amount
equal to $1.00 multiplied by the number of shares so surrendered in accordance
with the provisions of Section (B)(4)(a) of this Article FOURTH. Such
redemption shall be deemed to have occurred at the time that such shares of 9%
Preferred Stock shall have been surrendered for redemption in accordance
herewith and the rights of the holder of such shares of 9% Preferred Stock as a
holder of 9% Preferred Stock shall cease at such time. In the case of any
shares of 9% Preferred Stock which are redeemed in part only, upon such
redemption the Corporation shall execute and deliver to the holder thereof, as
requested by such holder, a new certificate for shares of 9% Preferred Stock of
authorized denominations equal to the unredeemed portion of such shares of 9%
Preferred Stock.
(c) NOTICE OF RIGHT OF REDEMPTION. Within 30 days after the
Corporation determines that, as of the last day of any calendar quarter, the
total stockholders' equity of the Corporation exceeds $5,000,000 (as determined
in accordance with generally accepted accounting principles applied in a
consistent manner with prior periods), the Corporation shall give notice thereof
to the holders of the 9% Preferred Stock. Such notice shall specify the
redemption price and the period of time during which holders of 9% Preferred
Stock may cause such shares to be redeemed by the Corporation as described in
Section (B)(4) of this Article FOURTH.
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(5) REDEMPTION OF 9% PREFERRED STOCK BY THE CORPORATION
(a) RIGHT TO REDEEM 9% PREFERRED STOCK. The 9% Preferred Stock
may be redeemed, at the option of the Corporation, in whole or in part, at any
time at a price of $1.00 per share. If the Corporation desires to redeem the
shares of 9% Preferred Stock, the Corporation shall give the holders thereof
notice of such redemption, which notice shall set forth the number of shares to
be redeemed and the place and date fixed for redemption, which date shall be not
less than 30 nor more than 60 days after the date of such notice. On the date
fixed for redemption, the holders of shares of 9% Preferred Stock shall
surrender the certificates therefor against payment of the redemption amount.
If the shares of 9% Preferred Stock are to be redeemed in part, each such
redemption shall be applied pro rata to the shares of 9% Preferred Stock then
outstanding.
(b) PAYMENT OF REDEMPTION PRICE. As promptly as practicable
after the surrender, as herein provided, of shares of 9% Preferred Stock for
redemption, the Corporation shall pay or cause to be paid to or upon the written
order of the holder of the shares of 9% Preferred Stock so surrendered an amount
equal to $1.00 multiplied by the number of shares so surrendered in accordance
with the provisions of Section (B)(5)(a) of this Article FOURTH. Such
redemption shall be deemed to have occurred at the time that such shares of 9%
Preferred Stock shall have been surrendered for redemption in accordance
herewith and the rights of the holder of such shares of 9% Preferred Stock as a
holder of 9% Preferred Stock shall cease at such time. In the case of any
shares of 9% Preferred Stock which are redeemed in part only, upon such
redemption the Corporation shall execute and deliver to the holder thereof, as
requested by such holder, a new certificate for shares of 9% Preferred Stock of
authorized denominations equal to the unredeemed portion of such shares of 9%
Preferred Stock.
(6) VOTING. Other than any voting rights created by applicable law,
the holders of shares of 9% Preferred Stock shall not be entitled to vote at any
election of directors or any other matter upon which holders of the Common Stock
have the right to vote or to receive notice of any meeting of stockholders.
(7) PREFERENCE ON LIQUIDATION, ETC. In the event of any voluntary or
involuntary liquidation, distribution of all or substantially all of the assets,
dissolution, or winding-up of the Corporation (any such event being hereinafter
referred to as a "Liquidation Transaction"), any payment or distribution of the
assets of the Corporation (whether capital or surplus), or the proceeds thereof,
shall be made to or set apart in the following order of preference: (i) the
holders of shares of 9% Preferred Stock shall be entitled to receive payment of
$1.00 per share of 9% Preferred Stock held by them, plus any accrued and unpaid
dividends on the 9% Preferred Stock, if any (and no more), and, if the assets of
the Corporation shall be insufficient to pay in full the preferential amounts
set forth in this clause (i), then such assets shall be distributed among such
holders ratably in accordance with the respective amounts which would be payable
on such shares if all amounts payable thereon were paid in full; and (ii) after
payment in full of the preferential amounts set forth in clause (i) above, the
holders of shares of Common Stock shall be entitled to receive ratably payment
or distribution of the remaining assets per share of Common Stock.
FIFTH: Election of directors need not be by written ballot.
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SIXTH: The Board of Directors is authorized to adopt, amend, or repeal
By-Laws of the Corporation, except as and to the extent provided in the By-Laws.
SEVENTH: Any person who was or is a party or is threatened to be made a
party to any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (whether or not by or
in the right of the Corporation) by reason of the fact that he is or was a
director, officer, incorporator, employee, or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
incorporator, employee, partner, trustee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise (including an employee
benefit plan), shall be entitled to be indemnified by the Corporation to the
full extent then permitted by law against expenses (including attorneys' fees),
judgments, fines (including excise taxes assessed on a person with respect to an
employee benefit plan), and amounts paid in settlement incurred by him in
connection with such action, suit, or proceeding. Such right of indemnification
shall inure whether or not the claim asserted is based on matters which antedate
the adoption of this Article SEVENTH. Such right of indemnification shall
continue as to a person who has ceased to be a director, officer, incorporator,
employee, partner, trustee, or agent and shall inure to the benefit of the heirs
and personal representatives of such a person. The indemnification provided by
this Article SEVENTH shall not be deemed exclusive of any other rights which may
be provided now or in the future under any provision currently in effect or
hereafter adopted by the By-Laws, by any agreement, by vote of stockholders, by
resolution of disinterested directors, by provision of law, or otherwise.
EIGHTH: No director of the Corporation shall be liable to the Corporation
or any of its stockholders for monetary damages, for breach of fiduciary duty as
a director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit.
NINTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs.
If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made,
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be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation."
(4) The foregoing Restated Certificate of Incorporation has been duly
adopted in accordance with the applicable provisions of Section 245 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has
been signed under the seal of the Corporation by Harold R. Hutchings, M.D., its
President and Chief Executive Officer, and attested to by D. Scott Hagen, its
Assistant Secretary, this 7th day of April, 1989.
CORTEX PHARMACEUTICALS, INC.
By: /s/ HAROLD R. HUTCHINGS
---------------------------------------------
Harold R. Hutchings, M.D.,
[SEAL] President and Chief Executive
Officer
ATTEST:
By: /s/ D. SCOTT HAGEN
-----------------------
D. Scott Hagen,
Assistant Secretary
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CORTEX PHARMACEUTICALS, INC.
(Pursuant to Sections 228 and 242 of the
General Corporation Law of the State of Delaware)
CORTEX PHARMACEUTICALS, INC., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify:
FIRST: That the Certificate of Incorporation of the Corporation was filed
with the Secretary of State of the State of Delaware on February 10, 1987 and
was amended on March 17, 1988, May 11, 1988, August 30, 1988 and April 5, 1989,
respectively, and was restated on April 11, 1989.
SECOND: That at a meeting of the Board of Directors of the Corporation
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of the Corporation, declaring said amendment to be
advisable and directing said amendment to be submitted to the stockholders of
the Corporation entitled to vote thereon for adoption by written consent. The
resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of the corporation be
amended by changing paragraph (B)(4) of Article FOURTH so that, as amended,
paragraph (B)(4) of Article FOURTH shall read as follows:
(4) REDEMPTION OF 9% PREFERRED STOCK BY HOLDERS
(a) RIGHT TO REDEEM 9% PREFERRED STOCK. Subject to and upon
compliance with the provisions of this Section (B)(4) of this Article FOURTH,
during the six-month period (the "Election Period") following the date of the
Notice (as defined in Section (B)(4)(c) of this Article FOURTH) each holder of
shares of 9% Preferred Stock shall have the option, but not the obligation, to
require the Corporation to redeem his shares of 9% Preferred Stock at a price of
$1.00 per share (the "Redemption Price"). A holder of shares of 9% Preferred
Stock wishing to require the Corporation to redeem such shares shall surrender
the shares which are to be so redeemed to the Corporation or to such agent as
may be appointed by the Corporation for such purpose at any time during the
Election Period during usual business hours accompanied by a written notice of
election to redeem and, if so required by the Corporation, by a written
instrument or instruments of transfer in form satisfactory to the Corporation
duly executed by the holder or his attorney duly authorized in writing.
(b) REDEMPTION PROCEDURE; PAYMENT OF REDEMPTION PRICE. Within
ten (10) business days after the expiration of the Election Period, the
Corporation shall pay or cause to be paid to or upon the written order of each
holder of shares of 9% Preferred Stock
<PAGE>
surrendered for redemption in accordance with the provisions of Section
(B)(4)(a) of this Article FOURTH an amount equal to the Redemption Price
multiplied by the number of shares so surrendered. If the funds of the
Corporation legally available for redemption of shares of 9% Preferred Stock as
of the last day of the Election Period are insufficient to redeem the total
number of shares of 9% Preferred Stock surrendered for redemption as provided
herein, those funds which are legally available shall be used to redeem the
maximum possible number of shares of 9% Preferred Stock which are so surrendered
for redemption. In the event a greater number of shares of 9% Preferred Stock
are surrendered for redemption according to Section (B)(4) of this Article
FOURTH than may lawfully be purchased by the Corporation on the last day of the
Election Period, the shares of 9% Preferred Stock so surrendered for redemption
shall be redeemed pro rata, according to the number of shares of 9% Preferred
Stock duly surrendered for redemption by each holder of shares of 9% Preferred
Stock. Such redemption shall be deemed to have occurred as of the last day of
the Election Period, and from and after such date the shares of 9% Preferred
Stock so redeemed shall be deemed to be no longer outstanding, each surrendered
certificate shall be cancelled and retired, and the holders thereof shall cease
to be stockholders with respect to such shares and shall have no rights with
respect thereto, except the rights to receive from the Corporation payment of
the Redemption Price of such shares, without interest. In the case of any
shares of 9% Preferred Stock which are redeemed in part only, upon such
redemption the Corporation shall execute and deliver to the holder thereof, as
requested by such holder, a new certificate for shares of 9% Preferred Stock of
authorized denominations equal to the unredeemed portion of such shares of 9%
Preferred Stock.
(c) NOTICE OF RIGHT OF REDEMPTION. Within thirty (30) days
after the last day of the first calendar quarter with respect to which the
Corporation determines that, as of the last day of such calendar quarter, the
total stockholders' equity of the Corporation exceeds $5,000,000 (as determined
in accordance with generally accepted accounting principles applied in a
consistent manner with prior periods), the Corporation shall give a notice (the
"Notice") thereof to the holders of the 9% Preferred Stock. Such Notice shall
state the Redemption Price and the period of time during which holders of shares
of 9% Preferred Stock may elect to have such shares redeemed by the Corporation
as described in Section (B)(4) of this Article FOURTH.
(d) WITHDRAWAL RIGHTS. Any holder of 9% Preferred Stock who,
during the Election Period, duly elects to require the Corporation to redeem
some or all of his shares of 9% Preferred Stock and surrenders the certificate
or certificates representing such shares for redemption may withdraw such
election at any time during the Election Period by giving written notice by
mail, postage-prepaid, to the Corporation at its principal executive office.
The Corporation shall, as soon as practicable thereafter, return the certificate
or certificates representing the shares of 9% Preferred Stock which such holder
shall have surrendered for redemption to the holder at his address as it appears
on the records of the Corporation, and such shares shall remain outstanding and
entitled to all the rights and preferences provided herein.
THIRD: The foregoing amendment to the Certificate of Incorporation was
duly adopted by the stockholders of the Corporation by written consent given in
accordance with the applicable provisions of Sections 228 and 242 of the General
Corporation Law of the State of Delaware and written notice of such action has
been given as provided in Section 228 of the General Corporation Law of the
State of Delaware.
2
<PAGE>
FOURTH: This amendment to the Certificate of Incorporation shall be
effective on and as of the date of filing of this Certificate of Amendment with
the Office of the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be executed by Harold R. Hutchings, M.D., its President, and
attested to by D. Scott Hagen, its Assistant Secretary, this 26th day of June,
1989.
CORTEX PHARMACEUTICALS, INC.
[SEAL]
By: /s/ HAROLD R. HUTCHINGS
----------------------------------------------
Harold R. Hutchings, President
ATTEST:
By: /s/ D. SCOTT HAGEN
---------------------------
D. Scott Hagen,
Assistant Secretary
3
<PAGE>
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
CORTEX PHARMACEUTICALS, INC.
(Pursuant to Section 151 of the General Corporation
Law of the State of Delaware)
CORTEX PHARMACEUTICALS, INC., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies that, pursuant to the authority contained in Article Fourth, Section
(A)(2) of its Restated Certificate of Incorporation, and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, its Board of Directors has adopted the following resolution creating a
series of its Preferred Stock designated as Series B Convertible Preferred
Stock:
RESOLVED, that a series of the class of authorized Preferred Stock of the
Corporation be, and hereby is, created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof, are as follows:
(1) DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series B Convertible Preferred Stock" (the "Series B Preferred
Stock") and the number of shares constituting such series shall be 3,750,000.
The number of shares of Series B Preferred Stock may be decreased (but not below
the number of shares then outstanding) or increased by a certificate executed,
acknowledged, filed, and recorded in accordance with the General Corporation Law
of the State of Delaware setting forth a statement that a specified decrease or
increase, as the case may be, thereof had been authorized and directed by a
resolution or resolutions adopted by the Board of Directors pursuant to
authority expressly vested in it by the provisions of the Certificate of
Incorporation of the Corporation.
(2) CONVERSION. The holders of shares of Series B Preferred Stock
shall have the right, at their option, to convert such shares into shares of
Common Stock at any time on the following terms and conditions:
(a) Each share of Series B Preferred Stock shall be convertible
at the option of the holder thereof at the office of the Corporation or at the
office of the transfer agent, if any, for the Series B Preferred Stock into
shares of duly authorized, fully paid, and non-assessable shares of Common Stock
at the conversion price of $1.345 per share of Common Stock (the "Conversion
Rate"), subject to adjustment as provided in subsection (2)(c) below. The
number of shares of Common Stock to be delivered upon conversion of the Series B
Preferred Stock shall be determined by dividing the liquidation amount ($0.6667
per share) of the shares surrendered by the Conversion Rate at the time of
surrender, calculated to the nearest 1/100th of a share (fractions of less than
1/100 being disregarded). The Corporation shall make no payment
<PAGE>
or adjustment on the account of any declared but unpaid dividends on the shares
of Series B Preferred Stock surrendered for conversion or on account of any
dividends on the Common Stock.
(b) Before any holder of shares of Series B Preferred Stock
shall be entitled to convert the same into Common Stock, he shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or the transfer agent therefor, if any, and shall give written
notice to the Corporation that he elects to convert all or part of the shares
represented by the certificate or certificates and shall state in writing
therein the name or names in which he wishes the certificate or certificates for
Common Stock to be issued. The Corporation will, as soon as practicable
thereafter, issue and deliver to such holder of shares of Series B Preferred
Stock, or to his nominee or nominees, certificates for the number of full shares
of Common Stock to which he shall be entitled as aforesaid, together with cash
in lieu of any fraction of a share as hereinafter provided. If surrendered
certificates for Series B Preferred Stock are converted only in part, the
Corporation will issue and deliver to the holder, or to his nominee or nominees,
a new certificate or certificates representing the aggregate of the unconverted
shares of Series B Preferred Stock. Shares of Series B Preferred Stock shall be
deemed to have been converted as of the date of the surrender of such shares for
conversion as provided above, and the person or persons entitled to receive the
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such Common Stock on such date.
(c) The Conversion Rate shall be subject to adjustment as
follows:
(i) In case the Corporation shall (w) pay a dividend or
make a distribution on its outstanding shares of Common Stock in shares of
its capital stock (whether shares of its Common Stock or of capital stock
of any other class), (x) subdivide its outstanding shares of Common Stock,
(y) combine its outstanding shares of Common Stock into a smaller number of
shares, or (z) issue by reclassification of its shares of Common Stock any
shares of capital stock of the Corporation, the Conversion Rate in effect
immediately prior to such action shall be adjusted so that the holder of
any shares of Series B Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares of capital
stock of the Corporation which he would have owned immediately following
such action had such shares of Series B Preferred Stock been converted
immediately prior thereto. An adjustment made pursuant to this subsection
(i) shall become effective retroactively immediately after the record date
in the case of a dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination, or reclassification.
(ii) In case the Corporation shall issue to holders of
shares of its outstanding Common Stock generally any rights, options, or
warrants entitling them to subscribe for or purchase (w) shares of its
Common Stock, (x) any assets of the Corporation, (y) any securities of the
Corporation (except its Common Stock) or of any corporation other than the
Corporation, or (z) any rights, options, or warrants entitling them to
subscribe for or to purchase any of the foregoing securities, whether or
not such rights, options, or warrants are immediately exercisable
(hereinafter collectively called a "Distribution on Common Stock"), the
Corporation shall issue to the holders of
2
<PAGE>
outstanding shares of Series B Preferred Stock the Distribution on Common
Stock to which they would have been entitled if they had converted the
shares of Series B Preferred Stock held by them into Common Stock
immediately prior to the record date for the purpose of determining
stockholders entitled to receive such Distribution on Common Stock.
(d) DE MINIMUS CHANGES. No adjustment in the Conversion Rate
shall be required unless such adjustment would require an increase or decrease
of at least 1% in the Conversion Rate; provided, however, that any adjustments
which by reason of this subsection (2)(d) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under subsection (2)(c) above shall be made to the nearest cent or
to the nearest one hundredth of a share, as the case may be.
(e) NOTICE OF ADJUSTMENT. Whenever the Conversion Rate is
adjusted, as herein provided, the Corporation shall promptly cause a notice
setting forth the adjusted Conversion Rate to be mailed to the holders of the
Series B Preferred Stock.
(f) NO FRACTIONAL SHARES TO BE ISSUED. No fractional shares or
scrip representing fractional shares of Common Stock shall be issued upon
conversion of Series B Preferred Stock. Instead of any fractional share of
Common Stock which would otherwise be issuable upon conversion of Series B
Preferred Stock (or specified portions thereof), the Corporation shall pay in
cash to the holders of such Series B Preferred Stock in respect of such fraction
of a share an amount equal to the same fraction of the fair market value per
share of Common Stock as determined by the Board of Directors in its sole
discretion.
(g) EFFECT OF SALE, MERGER, OR CONSOLIDATION. In the event of
any capital reorganization of the Corporation, or of any reclassification (other
than a change in par value) of the Common Stock, or of any conversion of the
Common Stock into securities of another corporation, or the consolidation of the
Corporation with, or the merger of the Corporation into, any other corporation
where the Corporation is not the surviving corporation or in the event of the
sale of all or substantially all of the properties and assets of the Corporation
to any other corporation (each such event hereinafter being referred to as a
"Capital Change"), a share of Series B Preferred Stock shall be convertible
after such Capital Change, upon the terms and conditions herein specified, for
the number of shares of stock or other securities or property of the
Corporation, or of the corporation into which shares of Common Stock are
converted or resulting from such consolidation or surviving such merger or to
which such sale shall be made, as the case may be, to which the shares of Common
Stock issuable (at the time of such Capital Change) upon conversion of such
share of Series B Preferred Stock would have been entitled upon such Capital
Change. In any such case, if necessary, the provisions set forth in this
subsection (2) with respect to the rights and interests thereafter of the
holders of the Series B Preferred Stock shall be appropriately adjusted so as to
be reasonably applicable to any shares of stock or other securities or property
thereafter deliverable on the conversion of the Series B Preferred Stock. The
subdivision or combination of shares of Common Stock at any time outstanding
into a greater or lesser number of shares of Common Stock shall not be deemed to
be a reclassification of the Common Stock for the purpose of this subsection
(2)(g). The Corporation shall not effect any consolidation, merger, or sale
resulting in a Capital Change, unless prior to or simultaneously with the
consummation thereof, any successor corporation or
3
<PAGE>
corporation purchasing such assets shall assume, by written instrument, the
obligation to deliver to the holder of each share of Series B Preferred Stock
such shares of stock, securities, or assets as the holders of Series B Preferred
Stock may be entitled to receive upon exercise of the Series B Preferred Stock
in accordance with the foregoing provisions, and the other obligations of the
Corporation hereunder.
(h) NOTICE OF RECLASSIFICATION OR RECAPITALIZATION, ETC.
In case:
(i) the Corporation shall authorize the issuance to all
holders of Common Stock of rights or warrants to subscribe for or purchase
shares of its capital stock or of any other right;
(ii) the Corporation shall authorize the distribution to
all holders of Common Stock of evidences of its indebtedness or assets or
the change or adoption of a dividend policy;
(iii) of any subdivision, combination, or reclassification
of Common Stock, or of any consolidation or merger to which the Corporation
is a party and for which approval of any stockholders of the Corporation is
required, or of the sale or transfer of all or substantially all of the
assets of the Corporation; or
(iv) of the voluntary or involuntary dissolution,
liquidation, or winding up of the Corporation;
then the Corporation shall mail to the holders of Series B Preferred Stock at
least 10 days prior to the applicable record date hereinafter specified in
clauses (x) and (y) below, a notice stating (x) the date as of which the holders
of Common Stock of record to be entitled to receive any such rights, warrants,
or distribution are to be determined, or (y) the date on which any such
subdivision, combination, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation, winding up, or other action is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their Common Stock for securities
or other property, if any, deliverable upon such subdivision, combination,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation, winding up, or other action. The failure to give the notice
required by this subsection (2)(h) or any defect therein shall not affect the
legality or validity of any distribution, right, warrant, subdivision,
combination, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation, winding up, or other action, or the vote upon any of
the foregoing.
(i) RESERVATION OF SHARES FOR ISSUANCE UPON CONVERSION. The
Corporation covenants that it will at all times reserve and keep available out
of its authorized Common Stock, free from preemptive rights, solely for the
purpose of issuance upon conversion of the Series B Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of the Series B Preferred Stock. The
Corporation covenants that all shares of Common Stock which shall be so issuable
upon conversion of the Series B Preferred Stock as herein provided shall, when
issued, be duly
4
<PAGE>
authorized, validly issued, and fully paid and nonassessable, free of all liens
and charges and not subject to preemptive rights and that, upon conversion of
the Series B Preferred Stock, the appropriate capital stock accounts of the
Corporation shall be duly credited.
(j) PAYMENT OF TAXES ON SHARES ISSUED UPON CONVERSION. The
issuance of certificates for shares of Common Stock upon the conversion of
shares of the Series B Preferred Stock shall be made without charge to the
converting holders for any tax in respect of the issuance of such certificates
and such certificates shall be issued in the respective names of, or in such
names as may be directed by, the holders of the shares of the Series B Preferred
Stock converted; provided, however, that the Corporation shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificate in a name other than that of the
shares of the Series B Preferred Stock converted, and the Corporation shall not
be required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Corporation the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
(3) VOTING. Other than any voting rights created by applicable law,
the holders of shares of Series B Preferred Stock shall not be entitled to vote
at any election of directors or any other matter upon which holders of the
Common Stock have the right to vote or to receive notice of any meeting of
stockholders.
(4) PREFERENCE ON LIQUIDATION, ETC. In the event of any voluntary or
involuntary liquidation, distribution of all or substantially all of the assets,
dissolution, or winding-up of the Corporation (any such event being hereinafter
referred to as a "Liquidation Transaction"), any payment or distribution of the
assets of the Corporation (whether capital or surplus), or the proceeds thereof,
shall be made to or set apart in the following order of preference: (i) the
holders of shares of 9% Cumulative Convertible Preferred Stock of the
Corporation shall be entitled to receive the preferential amounts set forth in
Article Fourth, Section (B)(7) of the Corporation's Restated Certificate of
Incorporation; (ii) after payment in full of the preferential amounts with
respect to the 9% Cumulative Convertible Preferred Stock and prior to and in
preference to any distribution of any assets of the Corporation to the holders
of the Common Stock, the holders of shares of Series B Preferred Stock shall be
entitled to be paid, by reason of their ownership thereof, the amount of $0.6667
per share of Series B Preferred Stock, plus any declared and unpaid dividends on
the Series B Preferred Stock, if any (and no more), and, if the assets of the
Corporation then available for distribution shall be insufficient to pay in full
the preferential amounts set forth in this clause (ii), then such assets shall
be distributed ratably among the holders of Series B Preferred Stock in
accordance with the respective amounts which would be payable on such shares if
all amounts payable thereon were paid in full; and (iii) after payment in full
of the preferential amounts set forth in clauses (i) and (ii) above, the holders
of shares of Common Stock shall be entitled to receive ratably payment or
distribution of the remaining assets of the Corporation available for
distribution.
(5) DIVIDENDS. Subject to the provisions of Article Fourth, Section
(B)(2), of the Corporation's Restated Certificate of Incorporation with respect
to the 9% Cumulative Convertible Preferred Stock, the holders of shares of
Series B Preferred Stock shall be entitled to
5
<PAGE>
receive cash dividends as, if and when declared by the Board of Directors of the
Corporation, out of any assets of the Corporation legally available therefor.
(6) REDEMPTION BY THE CORPORATION.
(a) RIGHT TO REDEEM. The Series B Preferred Stock may be
redeemed, at the option of the Corporation, in whole or in part, at any time
after the fifth anniversary date of the Original Issue Date (as such term is
defined below) of the Series B Preferred Stock at a price of $0.6667 per share.
If the Corporation desires to redeem the shares of Series B Preferred Stock, the
Corporation shall give the holders thereof notice of such redemption, which
notice shall set forth the number of shares to be redeemed and the place and
date fixed for redemption, which date shall be not less than 30 nor more than 60
days after the date of such notice. On the date fixed for redemption, the
holders of shares of Series B Preferred Stock shall surrender the certificates
therefor against payment of the redemption amount. If the shares of Series B
Preferred Stock are to be redeemed in part, each such redemption shall be
applied pro rata to the shares of Series B Preferred Stock then outstanding. As
used in this Section (6)(a), the term "Original Issue Date" shall refer to the
first date on which any shares of Series B Preferred Stock are issued by the
Corporation.
(b) PAYMENT OF REDEMPTION PRICE. As promptly as practicable
after the surrender, as herein provided, of shares of Series B Preferred Stock
for redemption, the Corporation shall pay or cause to be paid to or upon the
written order of the holder of the shares of Series B Preferred Stock so
surrendered an amount equal to $0.6667 multiplied by the number of shares so
surrendered in accordance with the provisions of Section (6)(a)above. Such
redemption shall be deemed to have occurred at the time that such shares of
Series B Preferred Stock shall have been surrendered for redemption in
accordance herewith and the rights of the holder of such shares of Series B
Preferred Stock as a holder of Series B Preferred Stock shall cease at such
time. In the case of any shares of Series B Preferred Stock which are redeemed
in part only, upon such redemption the Corporation shall execute and deliver to
the holder thereof, as requested by such holder, a new certificate for shares of
Series B Preferred Stock of authorized denominations equal to the unredeemed
portion of such shares of Series B Preferred Stock.
6
<PAGE>
IN WITNESS WHEREOF, CORTEX PHARMACEUTICALS, INC. has caused this
Certificate of Designation, Preferences and Rights of Series B Convertible
Preferred Stock to be duly executed by its President and Chief Executive Officer
and attested to by its Assistant Secretary and has caused its corporate seal to
be affixed hereto this 29th day of April, 1991.
CORTEX PHARMACEUTICALS, INC.
By: /s/ VAUGHAN H. J. SHALSON
----------------------------------------------
Vaughan H. J. Shalson,
President and Chief
Executive Officer
(Corporate Seal)
ATTEST:
/s/ D. SCOTT HAGEN
- -----------------------------------
D. Scott Hagen
Assistant Secretary
7
<PAGE>
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF DESIGNATION,
PREFERENCES AND RIGHTS OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
CORTEX PHARMACEUTICALS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "corporation") is
CORTEX PHARMACEUTICALS, INC.
2. The Certificate of Designation, Preferences and Rights of Series B
Convertible Preferred Stock of the corporation, which was filed by the Secretary
of State of Delaware on April 29, 1991, is hereby corrected.
3. The defect to be corrected in said instrument is as follows:
The conversion price of $1.345 per share listed at line 6 of
subparagraph (a) of paragraph (2), CONVERSION, at page 2 of the Certificate
of Designation, Preferences and Rights of Series B Convertible Preferred
Stock shall be corrected to read as follows: $1.359.
4. Subparagraph (a) of paragraph (2) in corrected form is as follows:
" (a) Each share of Series B Preferred Stock shall be convertible at
the option of the holder thereof at the office of the Corporation or at the
office of the transfer agent, if any, for the Series B Preferred Stock into
shares of duly authorized, fully paid, and non-assessable shares of Common
Stock at the conversion price of $1.359 per share of Common Stock (the
"Conversion Rate"), subject to adjustment as provided in subsection (2)(c)
below. The number of shares of Common Stock to be delivered upon
conversion of the Series B Preferred Stock shall be determined by dividing
the liquidation amount ($0.6667 per share) of the shares surrendered by the
Conversion Rate at the time of surrender, calculated to the nearest 1/100th
of a share (fractions of less than 1/100 being disregarded). The
Corporation shall make no payment or adjustment on the account of any
declared but unpaid dividends on the shares of Series B Preferred Stock
surrendered for conversion or on account of any dividends on the Common
Stock."
<PAGE>
Signed and attested to on April 30, 1991.
/S/ VAUGHAN H. J. SHALSON
----------------------------------------------
Vaughan H. J. Shalson, President and Chief
Executive Officer
/S/ D. SCOTT HAGEN
- ----------------------------
D. Scott Hagen, Assistant
Secretary
2
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
CORTEX PHARMACEUTICALS, INC.
(Pursuant to Section 151(g) of the General Corporation
Law of the State of Delaware)
CORTEX PHARMACEUTICALS, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Corporation"),
hereby certifies that, pursuant to the authority contained in Article Fourth,
Section (A)(2) of its Restated Certificate of Incorporation, Paragraph (1) of
its Certificate of Designation, Preferences and Rights of Series B Convertible
Preferred Stock and in accordance with the provisions of Section 151(g) of the
General Corporation Law of the State of Delaware, its Board of Directors has
duly adopted the following resolution decreasing the number of shares of the
Series B Convertible Preferred Stock from 3,750,000 to 3,200,000:
RESOLVED, that the number of shares constituting the Series
B Convertible Preferred Stock be decreased from 3,750,000 to
3,200,000.
IN WITNESS WHEREOF, CORTEX PHARMACEUTICALS, INC. has caused this
Certificate of Decrease of Number of Shares of Series B Convertible Preferred
Stock to be duly executed by its President and Chief Executive Officer and
attested to by its Assistant Secretary and has caused its corporate seal to be
affixed hereto this 22nd day of May, 1991.
CORTEX PHARMACEUTICALS, INC.
By: /s/ VAUGHAN H. J. SHALSON
-----------------------------------------
Vaughan H. J. Shalson,
President and Chief
Executive Officer
[Corporate Seal]
ATTEST:
/s/ D. SCOTT HAGEN
- ------------------------------
D. Scott Hagen,
Assistant Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CORTEX PHARMACEUTICALS, INC.
CORTEX PHARMACEUTICALS, INC., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify:
FIRST: That at a meeting of the Board of Directors of the Corporation
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of the Corporation, declaring said amendment to be
advisable and directing said amendment to be submitted to the stockholders of
the Corporation at its Annual Meeting. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that Article Fourth, paragraph (A)(1) of the Certificate of
Incorporation of the Corporation be amended to read in its entirety:
The aggregate number of shares which the Corporation shall have the
authority to issue is 55,000,000, of which 5,000,000 shares of the par
value of $.001 per share shall be designated "Preferred Stock" and
50,000,000 of the par value $.001 per share shall be designated "Common
Stock."
SECOND: That thereafter, pursuant to resolution of the Board of Directors,
the Annual Meeting of the stockholders of the Corporation was duly called and
held, upon notice in accordance with Section 222 of the Delaware General
Corporation Law, at which meeting the necessary number of shares as required by
statute were voted in favor of the amendment.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment
to be executed by Jay D. Glass, Ph.D., its President, and attested to by
D. Scott Hagen, its Secretary, this 30th day of October, 1992.
CORTEX PHARMACEUTICALS, INC.
[SEAL]
By: /s/ JAY D. GLASS
-----------------------------------------
Jay D. Glass, President
ATTEST:
By: /s/ D. SCOTT HAGEN
---------------------------
D. Scott Hagen, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
CORTEX PHARMACEUTICALS, INC.,
A DELAWARE CORPORATION
(Pursuant to Section 242 of the Delaware General Corporation Law)
CORTEX PHARMACEUTICALS, INC., a corporation organized and existing under
and by virtue of the Delaware General Corporation Law (the "Corporation"), does
hereby certify that:
FIRST: At a duly held meeting of the Board of Directors of the
Corporation, the Board of Directors of the Corporation duly adopted resolutions
setting forth amendments to the Restated Certificate of Incorporation of the
Corporation, declaring said amendments to be advisable and directing that said
amendments be submitted to the stockholders of the Corporation for consideration
thereof. The resolutions setting forth the proposed amendments are as follows:
"RESOLVED, that the Restated Certificate of Incorporation of the
Corporation be amended to add ARTICLE TENTH, which shall read in its
entirety as follows:
'TENTH--REVERSE SPLIT. On the effective date of this
amendment to the Restated Certificate of Incorporation (the
"Effective Date"), the Common Stock of the Corporation will
be reverse split on a one-for-five basis so that each
authorized share of Common Stock immediately prior to the
Effective Date shall automatically be converted into and
reconstituted as one-fifth of a share of Common Stock (the
"Reverse Split"). No fractional shares will be issued by
the Corporation as a result of the Reverse Split. In lieu
thereof, each Stockholder whose shares of Common Stock are
not evenly divisible by five will receive a cash payment to
be calculated by multiplying the fraction of a share by the
equivalent of the average of the last sale prices for one
share of the Common Stock, as reported by Nasdaq, for the
ten (10) trading days immediately preceding the Effective
Date.'
RESOLVED, that ARTICLE FOURTH (A)(1) of the Restated Certificate
of Incorporation of the Corporation be amended and restated in its
entirety to read as follows:
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'FOURTH: (A)(1)-AUTHORIZED CAPITAL. (A) The total number
of shares of capital stock which the Company has the authority to
issue is 25,000,000 consisting of 20,000,000 shares of Common
Stock, $0.001 par value per share (the "Common Stock"), and
5,000,000 shares of Preferred Stock, $0.001 par value per share
(the "Preferred Stock").' "
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the Annual Meeting of the Stockholders of the Corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: Said amendments were duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, CORTEX PHARMACEUTICALS, INC. has caused this
Certificate of Amendment to be signed by D. Scott Hagen, its duly authorized
Vice President and Chief Financial Officer, this 5th day of January, 1995.
CORTEX PHARMACEUTICALS, INC.,
a Delaware corporation
By: /s/ D. SCOTT HAGEN
---------------------------------------------
D. Scott Hagen,
Vice President and Chief Financial Officer
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CERTIFICATE OF DESIGNATION, NUMBER, POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL, AND OTHER SPECIAL RIGHTS AND THE
QUALIFICATIONS, LIMITATIONS, RESTRICTIONS,
AND OTHER DISTINGUISHING CHARACTERISTICS OF
SERIES C PREFERRED STOCK
OF
CORTEX PHARMACEUTICALS, INC.
It is hereby certified that:
1. The name of the Corporation (hereinafter called the "Corporation") is
Cortex Pharmaceuticals, Inc., a Delaware corporation.
2. The articles of incorporation of the Corporation authorizes the
issuance of Five Million (5,000,000) shares of Preferred Stock of a par value of
one one-hundredth of one cent ($.001) each and expressly vests in the Board of
Directors of the Corporation the authority provided therein to issue any or all
of said shares in one or more Series and by resolution or resolutions to
establish the designation, number, full or limited voting powers, or the denial
of voting powers, preferences and relative, participating, optional, and other
special rights and the qualifications, limitations, restrictions, and other
distinguishing characteristics of each Series to be issued.
3. The Board of Directors of the Corporation, pursuant to the authority
expressly vested in it as aforesaid, has adopted the following resolutions
creating a Series C issue of Preferred Stock:
RESOLVED, that One Hundred and Sixty (160) of the Five Million (5,000,000)
authorized shares of Preferred Stock of the Corporation shall be designated
Series C Preferred Stock, $.001 par value per share, and shall possess the
rights and privileges set forth below:
Section 1. DESIGNATION AND AMOUNT. The shares of such Series shall be
designated as "Series C Preferred Stock" (the "Series C Preferred Stock") and
the number of shares constituting the Series C Preferred Stock shall be 160.
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce the number of shares of
Series C Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants to acquire shares of Series C Preferred
Stock or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series C Preferred Stock.
Section 2. RANK. The Series C Preferred Stock shall rank: (i) on
parity with all of the Corporation's Series B Convertible Preferred Stock, (ii)
junior to all of the Corporation's 9% Cumulative Convertible Preferred Stock,
and any other class or series of capital stock of the Corporation hereafter
created specifically ranking by its terms senior to the Series C Preferred Stock
(collectively, the "Senior Securities"); (iii) prior to all of the Corporation's
Common Stock par value $001 per share ("Common Stock"); (iv) prior to any class
or series of capital stock of
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the Corporation hereafter created specifically ranking by its terms junior to
any Series C Preferred Stock of whatever subdivision (collectively, with the
Common Stock, "Junior Securities"); (v) on parity with any class or series of
capital stock of the Corporation hereafter created specifically ranking by its
terms on parity with the Series C Preferred Stock ("Parity Securities") in each
case as to distributions of assets upon liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary (all such distributions
being referred to collectively as "Distributions").
Section 3. DIVIDENDS. The Series C Preferred Stock will bear no
dividends, and the holders of the Series C Preferred Stock ("Holders") shall not
be entitled to receive dividends on the Series C Preferred Stock.
Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the Holders of shares of Series C
Preferred Stock shall be entitled to receive, immediately after any
distributions to Senior Securities required by the Corporation's Certificate of
Incorporation or any certificate of designation of preferences, and prior and in
preference to any distribution to Junior Securities but in parity with any
distribution of Parity Securities, an amount per share equal to the sum of (i)
$25,000 for each outstanding share of Series C Preferred Stock (the "Original
Series C Issue Price") and (ii) an amount equal to 10% of the Original Series C
Issue Price per annum for the period that has passed since the date of issuance
of any Series C Preferred Stock (such amount being referred to herein as the
"Premium"). If upon the occurrence of such event, and after payment in full of
the preferential amounts with respect to the Senior Securities, the assets and
funds thus distributed among the Holders of the Series C Preferred Stock and
Parity Securities shall be insufficient to permit the payment to such Holders of
the full preferential amounts due to the Holders of the Series C Preferred Stock
and the Parity Securities, respectively, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed among the
Holders of the Series C Preferred Stock and the Parity Securities, pro rata,
based on the respective liquidation amounts to which each such series of stock
is entitled by the Corporation's Certificate of Incorporation and any
certificate of designation of preferences.
(b) Upon the completion of the distribution required by subsection 4(a),
if assets remain in this Corporation, they shall be distributed to holders of
Junior Securities in accordance with the Corporation's Certificate of
Incorporation including any duly adopted certificate(s) of designation of
preferences.
(c) A sale, conveyance or disposition of all or substantially all of the
assets of the Corporation or the effectuation by the Corporation of a
transaction or series of related transactions in which more than 50% of the
voting power of the Corporation is disposed of shall be deemed to be a
liquidation, dissolution or winding up within the meaning of this Section 4;
provided that, a consolidation or merger of the Corporation with or into any
other corporation or corporations shall not be treated as a liquidation,
dissolution or winding up within the meaning of this Section 4, but instead
shall be treated pursuant to Section 5 hereof.
Section 5. CONVERSION. The record Holders of this Series C Preferred
Stock shall have conversion rights as follows (the "Conversion Rights"):
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(a) RIGHT TO CONVERT. Each record Holder of Series C Preferred Stock
shall be entitled, commencing on the date of the last closing of a purchase and
sale of Series C Preferred Stock that occurs pursuant to the offering of the
Series C Preferred Stock by the Corporation (the "Last Closing Date"), which is
expected to be December 6, 1995, but in no event later than December 15, 1995
and at any time thereafter, subject to the Corporation's right of redemption set
forth in Section 6(a) and Section 6(b), at the option of the Holder, at the
office of the Corporation or any transfer agent for the Series C Preferred
Stock, to convert shares of Series C Preferred Stock held by such Holder (but
only in multiples of $25,000), into that number of fully-paid and non-
assessable shares of Common Stock at the Conversion Rate, as defined below.
Each record Holder of Series C Preferred Stock additionally shall be entitled
(at the times and in the amounts set forth below), and, subject to the
Corporation's right of redemption set forth in Section 6(a) and Section 6(b), at
the office of the transfer agent for the Series C Preferred Stock (the "Transfer
Agent"), to convert portions of the Series C Preferred Stock held by such Holder
(but only in multiples of $25,000) into that number of fully-paid and non-
assessable shares of Common Stock at the Conversion Rate, as defined below.
Each record Holder of Series C Preferred Stock shall be entitled to convert up
to one-third of the shares of Series C Preferred Stock held by such Holder
beginning 45 days following the Last Closing Date and an additional one-third of
the shares of Series C Preferred Stock held by such Holder beginning 75 days
following the Last Closing Date, and may convert any remaining Series C
Preferred Stock beginning 105 days following the Last Closing Date, at the
office of the Corporation or any Transfer Agent for the Series C Preferred
Stock, into that number of fully-paid and non-assessable shares of Common Stock
of the Corporation calculated in accordance with the following formula (the
"Conversion Rate"):
Number of shares issued upon conversion of one share of Series C Preferred Stock
=((.10) (N/365) (25,000) + 25,000) DIVIDED BY Conversion Price
where,
DEG. N = the number of days between (i) the Last Closing Date, as defined
herein, and (ii) the applicable date of conversion for the shares of Series
C Preferred Stock for which conversion is being elected, and
DEG. CONVERSION PRICE = the lesser of (x) the average Closing Bid Price, as
that term is defined below, for the five trading days ending on December 1,
1995, which amounts to $2.8250 (the "Fixed Conversion Price"), or (y) X
times the average Closing Bid Price, as that term is defined below, of the
Corporation's Common Stock for the five (5) trading days immediately
preceding the Date of Conversion, as defined below, where X shall equal .85
+ (1- (the average Closing Bid Price of the Corporation's Common Stock for
the five (5) trading days immediately preceding the Date of Conversion, as
that term is defined below, divided by the average Closing Bid Price of the
Corporation's Common Stock for the ten (10) trading days immediately
preceding the Date of Conversion)); provided that, in no event shall X be
less than .85 or greater than 1.0.
For purposes hereof, the term "Closing Bid Price" shall mean the closing
bid price on the over-the-counter market as reported by NASDAQ, or if then
traded on a national securities
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exchange or the National Market System, the mean of the high and low prices on
the principal national securities exchange or the National Market System on
which it is so traded.
(b) MECHANICS OF CONVERSION. In order to convert Series C Preferred
Stock into full shares of Common Stock, the Holder shall (i) fax a copy of the
fully executed notice of conversion in the form attached hereto ("Notice of
Conversion") to the Corporation at such office that he elects to convert the
same, which notice shall specify the number of shares of Series C Preferred
Stock to be converted and shall contain a calculation of the Conversion Rate
(together with a copy of the first page of each certificate to be converted) to
the Corporation or its designated transfer agent prior to Midnight, New York
City time (the "Conversion Notice Deadline") on the date of conversion specified
on the Notice of Conversion and (ii) surrender the original certificate or
certificates therefor, duly endorsed, and the original Notice of Conversion by
either overnight courier or 2-day courier, to the office of the Corporation or
of any transfer agent for the Series C Preferred Stock; provided, however, that
the Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such conversion unless either the
certificates evidencing such Series C Preferred Stock are delivered to the
Corporation or its transfer agent as provided above, or the Holder notifies the
Corporation or its transfer agent that such certificates have been lost, stolen
or destroyed. Upon receipt by the Corporation of evidence of the loss, theft,
destruction or mutilation of this a certificate of certificates ("Stock
Certificates") representing shares of Series C Preferred Stock, and (in the
case of loss, theft or destruction) of indemnity or security reasonably
satisfactory to the Corporation, and upon surrender and cancellation of the
Stock Certificate(s), if mutilated, the Corporation shall execute and deliver
new Stock Certificate(s) of like tenor and date. No fractional shares of Common
Stock shall be issued upon conversion of this Series C Preferred Stock. If any
conversion of the Series C Preferred Stock would create a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares of Common Stock
issuable upon conversion shall be the next higher number of shares. In the
case of a dispute as to the calculation of the Conversion Rate, the
Corporation's calculation shall be deemed conclusive absent manifest error.
The Corporation shall use all reasonable efforts to issue and deliver
within three (3) business days after delivery to the Corporation of such
certificates, or after such agreement and indemnification, to such Holder of
Series C Preferred Stock at the address of the Holder on the books of the
Corporation, a certificate or certificates for the number of shares of Common
Stock to which the Holder shall be entitled as aforesaid. The date on which
conversion occurs (the "Date of Conversion") shall be deemed to be the date
set forth in such Notice of Conversion, provided (i) that the advance copy
of the Notice of Conversion is faxed to the Corporation before midnight, New
York City time, on the Date of Conversion, and (ii) that the original Stock
Certificates representing the shares of Series C Preferred Stock to be
converted are surrendered by depositing such certificates by either overnight
courier or 2-day courier, as provided above, and received by the transfer
agent or the Corporation within five business days thereafter. The person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on such date. If the original Stock
Certificates representing the Series C Preferred Stock to be converted are
not received by the transfer agent or the Corporation within five business
days after the Date of Conversion or if the facsimile of the Notice of
Conversion is not received by the Corporation or its designated transfer
agent prior to the Conversion Notice Deadline, the Notice of Conversion, at
the Corporation's option, may be declared null and void.
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Following conversion of shares of Series C Preferred Stock, such shares of
Series C Preferred Stock will no longer be outstanding.
(c) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the Series C Preferred Stock, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all then outstanding
Series C Preferred Stock; and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of Series C Preferred Stock, the Corporation will
use its best efforts to take such corporate action as may be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(d) AUTOMATIC CONVERSION. Each share of Class C Preferred Stock
outstanding on December 6, 1997 automatically shall be converted into Common
Stock on such date at the Conversion Price then in effect (calculated in
accordance with the formula in Section 5(a) above) and December 6, 1997 shall be
deemed the Date of Conversion with respect to such conversion.
(e) ADJUSTMENT TO CONVERSION RATE.
(i) If, prior to the conversion of all of the Series C Preferred
Stock, the number of outstanding shares of Common Stock is increased by a stock
split, stock dividend, or other similar event, the Conversion Rate shall be
proportionately adjusted, or if the number of outstanding shares of Common Stock
is decreased by a combination or reclassification of shares, or other similar
event, the Conversion Rate shall be proportionately adjusted.
(ii) If, prior to the conversion of all Series C Preferred Stock,
there shall be any merger, consolidation, exchange of shares, recapitalization,
reorganization, or other similar event, as a result of which shares of Common
Stock of the Corporation shall be changed into the same or a different number of
shares of the same or another class or classes of stock or securities of the
Corporation or another entity, or other property then the Holders of Series C
Preferred Stock shall thereafter have the right to purchase and receive upon
conversion of Series C Preferred Stock, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock
immediately theretofore issuable upon conversion, such shares of stock and/or
securities or other property as may be issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately theretofore
purchasable and receivable upon the conversion of Series C Preferred Stock held
by such Holders had such merger, consolidation, exchange of share,
recapitalization or reorganization not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests of
the Holders of the Series C Preferred Stock to the end that the provisions
hereof (including, without limitation, provisions for adjustment of the
Conversion Rate and of the number of shares issuable upon conversion of the
Series C Preferred Stock) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof. The Corporation shall not effect any
transaction described in this subsection 5(e) unless the resulting successor or
acquiring entity (if not the Corporation) assumes by written instrument the
obligation to deliver to the Holders of the Series C Preferred Stock such shares
of stock and/or securities or other property as, in accordance with the
foregoing provisions, the
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Holders of the Series C Preferred Stock may be entitled to receive upon
conversion of the Series C Preferred Stock.
(iii) If any adjustment under this Section 5(e) would create a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares of Common Stock issuable upon conversion shall be the next higher number
of shares.
Section 6. CASH REDEMPTION BY CORPORATION.
(a) CORPORATION'S RIGHT TO REDEEM UPON RECEIPT OF NOTICE OF CONVERSION.
The Corporation shall have the right, in its sole discretion, upon receipt of a
Notice of Conversion pursuant to Section 5, to redeem in whole or in part any
Series C Preferred Stock submitted for conversion, immediately prior to
conversion. If the Corporation elects to redeem some, but not all, of the
Series C Preferred Stock submitted for conversion, the Corporation shall redeem
from among the Series C Preferred Stock submitted by the various Holders thereof
for conversion on the applicable date, a pro-rata amount from each Holder so
submitting Series C Preferred Stock for conversion. The Corporation shall
effect each such redemption by giving notice ("Notice of Redemption Upon Receipt
of Notice of Conversion") of its election to redeem, by facsimile within one
business day following receipt of a Notice of Conversion from a Holder, with a
copy by 2-day courier, to the Holders of Series C Preferred Stock selected for
redemption, at the address and facsimile number of such Holder appearing in the
Corporation's register for the Series C Preferred Stock and (B) the
Corporation's transfer agent. Such Notice of Redemption Upon Receipt of Notice
of Conversion shall indicate the number of shares of Holder's Series C Preferred
Stock that have been selected for redemption, the Date of Redemption Upon
Receipt of Notice of Conversion (as defined below) and the applicable Redemption
Price Upon Receipt of Notice of Conversion, as defined below. If the Notice of
Redemption Upon Receipt of Notice of Conversion is not received within the
times specified above or does not meet the conditions specified above, the
Notice of Redemption Upon Receipt of Notice of Conversion shall become null and
void (unless otherwise agreed in writing by the Holder). The Corporation shall
not be entitled to send any Notice of Redemption Upon Receipt of Notice of
Conversion and begin the redemption procedure unless it has (x) the full amount
of the Redemption Price Upon Receipt of Notice of Conversion, in cash, available
in a demand or other immediately available account in a bank or similar
financial institution or (y) immediately available credit facilities, in the
full amount of the Redemption Price Upon Receipt of Notice of Conversion, with
a bank or similar financial institution on the date the Notice of Redemption
Upon Receipt of Notice of Conversion is sent to the applicable Holder.
The Redemption Price Upon Receipt of Notice of Conversion per share of
Series C Preferred Stock shall equal the Closing Bid Price on the Date of
Conversion, multiplied by the number of shares of Common Stock that would
otherwise have been issuable had the shares of Series C Preferred Stock redeemed
been converted on the Date of Conversion as to such shares.
For the purposes of the above formula, "N", "Closing Bid Price" and
"Conversion Price" shall have the meanings set forth in Section 5(a) and "Date
of Redemption Upon Notice of Conversion" shall be deemed to be the Conversion
Date (as that term is defined in Section 5(b) above).
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The Redemption Price Upon Receipt of Notice of Conversion shall be paid to
the Holder of Series C Preferred Stock redeemed within 10 business days of the
delivery of the Notice of Redemption Upon Receipt of Notice of Conversion to
such Holder; provided, however, that the Corporation shall not be obligated to
deliver any portion of the Redemption Price Upon Receipt of Notice of Conversion
unless either the certificates evidencing the Series C Preferred Stock redeemed
are delivered to the Transfer Agent as provided in Section 5(b), or the Holder
notifies the Transfer Agent that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Corporation to indemnify
the Corporation from any loss incurred by it in connection with such
certificates. Notwithstanding the foregoing, in the event that the certificates
evidencing the Series C Preferred Stock redeemed are not delivered to the
Transfer Agent as provided in Section 5(b), the redemption of the Series C
Preferred Stock pursuant to this Section 6(a) shall still be deemed effective as
of the Date of Redemption Upon Receipt of Notice of Conversion.
(b) CORPORATION'S RIGHT TO REDEEM AT ITS ELECTION. Commencing 45 days
after the Last Closing Date, the Corporation shall have the right, in its sole
discretion, to redeem, from time to time, any or all of the Series C Preferred
Stock; provided that, the Corporation shall only be entitled to redeem shares of
Series C Preferred Stock with an aggregate Stated Value (as defined below) of at
least One Million Dollars ($1,000,000) on the first such redemption. If the
Corporation elects to redeem some, but not all, of the Series C Preferred Stock,
the Corporation shall redeem a pro-rata amount from each Holder of Series C
Preferred Stock. The Corporation shall effect each such redemption by giving at
least 30 days prior written notice ("Notice of Redemption At Corporation's
Election") to (A) the Holders of Series C Preferred Stock selected for
redemption, at the address and facsimile number of such Holder appearing in the
Corporation's register for the Series C Preferred Stock and (B) the Transfer
Agent, which Notice of Redemption At Corporation's Election shall be deemed to
have been delivered three (3) business days after the Corporation's mailing (by
overnight courier, with a copy by facsimile) of such Notice of Redemption At
Corporation's Election. Such Notice of Redemption At Corporation's Election
shall indicate the number of shares of Holder's Series C Preferred Stock that
have been selected for redemption, the date which such redemption is to become
effective (the "Date of Redemption At Corporation's Election") and the
applicable Redemption Price At Corporation's Election, as defined below. The
Corporation shall not be entitled to send any Notice of Redemption At
Corporation's Election and begin the redemption procedure unless it has (x) the
full amount of the Redemption Price At Corporation's Election, in cash,
available in a demand or other immediately available account in a bank or
similar financial institution or (y) immediately available credit facilities, in
the full amount of the Redemption At Corporation's Election, with a bank or
similar financial institution on the date the Notice of Redemption At
Corporation's Election is delivered to the applicable Holder. Notwithstanding
the above, the Holder may convert any or all of its Series C Preferred Stock
that is eligible for conversion, which would otherwise be subject to redemption
under this Section 6(b), by submitting a Notice of Conversion prior to the Date
of Redemption At Corporation's Election.
For purposes of this Section 6(b), "Stated Value" shall mean the Original
Series C Issue Price of the shares of Series C Preferred Stock redeemed pursuant
to this Section 6(b), as defined in Section 4(a), together with the accrued but
unpaid Premium (as defined in Section 4(a)) on such shares of Series C Preferred
Stock, as of the Date of Redemption At Corporation's Election.
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The Redemption Price At Corporation's Election shall be calculated as a
percentage of Stated Value of the shares of Series C Preferred Stock redeemed
pursuant to this Section 6(b), which percentage shall vary depending on the date
of Delivery of the Notice of Redemption at Corporation's Election, and shall be
determined as follows:
Date of Delivery of Notice of
Redemption at Corporation's Election % of Stated Value
- ------------------------------------ -----------------
45 days to 6 months following Last Closing Date 130%
6 months and 1 day to 12 months following Last Closing Date 125%
12 months and 1 day to 18 months following Last Closing Date 120%
18 months and 1 day to 24 months following Last Closing Date 115%
The Redemption Price At Corporation's Election shall be paid to the Holder of
Series C Preferred Stock redeemed within 10 business days of the Date of
Redemption At Corporation's Election; provided, however, that the Corporation
shall not be obligated to deliver any portion of the Redemption Price At
Corporation's Election unless either the certificates evidencing the Series C
Preferred Stock redeemed are delivered to the Transfer Agent prior to the 10th
business day following the Date of Redemption At Corporation's Election, or the
Holder notifies the Transfer Agent that such certificates have been lost, stolen
or destroyed and executes an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection with such
certificates. Notwithstanding the foregoing, in the event that the certificates
evidencing the Series C Preferred Stock redeemed are not delivered to the
Transfer Agent prior to the 10th business day following the Date of Redemption
At Corporation's Election, the redemption of the Series C Preferred Stock
pursuant to this Section 6(b) shall still be deemed effective as of the Date of
Redemption At Corporation's Election and the Redemption Price At Corporation's
Election shall be paid to the Holder of Series C Preferred Stock redeemed within
5 business days of the date the certificates evidencing the Series C Preferred
Stock redeemed are actually delivered to the Transfer Agent.
Section 7. ADVANCE NOTICE OF REDEMPTION
(a) HOLDER'S RIGHT TO ELECT TO RECEIVE NOTICE OF CASH REDEMPTION BY
CORPORATION. Holder shall have the right to require Corporation to provide
advance notice stating whether Corporation will elect to redeem Holder's shares
in cash, pursuant to Corporation's redemption rights discussed in Section 6.
(b) MECHANICS OF HOLDER'S ELECTION NOTICE. Holder shall send notice
("Election Notice") to Corporation and such other person(s) as the Corporation
may designate, by facsimile, stating Holder's intention to require Corporation
to disclose that if Holder were to exercise his, her or its right of conversion
(pursuant to section 5) whether Corporation would elect to redeem Holder's
convertible Security for cash in lieu of issuing Common Stock. Corporation is
required to disclose to Holder what action Corporation would take over the
subsequent five ten day period, including the date Corporation receives such
Election Notice.
(c) CORPORATION'S RESPONSE. Corporation must respond within one business
day of receipt of Holder's Election Notice (1) via facsimile and (2) via
overnight courier. If Corporation does not respond to Holder within one
business day via facsimile and overnight courier, Corporation shall be required
to issue to Holder Common Stock upon Holder's conversion within the subsequent
five day period.
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Section 8. VOTING RIGHTS. Except as otherwise provided by the Delaware
Business Corporation Act ("Delaware Law"), the holders of the Series C Preferred
Stock shall have no voting power whatsoever, and no holder of Series C Preferred
Stock shall vote or otherwise participate in any proceeding in which actions
shall be taken by the Corporation or the stockholders thereof or be entitled to
notification as to any meeting of the stockholders.
To the extent that under Delaware Law the vote of the holders of the Series
C Preferred Stock, voting separately as a class, is required to authorize a
given action of the Corporation, the affirmative vote or consent of the holders
of at least a majority of the shares of the Series C Preferred Stock represented
at a duly held meeting at which a quorum is present or by written consent of a
majority of the shares of Series C Preferred Stock (except as otherwise may be
required under Delaware Law) shall constitute the approval of such action by the
class. To the extent that under Delaware Law the holders of the Series C
Preferred Stock are entitled to vote on a matter with holders of Common Stock,
voting together as one class, each share of Series C Preferred Stock shall be
entitled to a number of votes equal to the number of shares of Common Stock into
which it is then convertible using the record date for the taking of such vote
of stockholders as the date as of which the Conversion Price is calculated.
Holders of the Series C Preferred Stock shall be entitled to notice of all
stockholder meetings or written consents with respect to which they would be
entitled to vote, which notice would be provided pursuant to the Corporation's
by-laws and applicable statutes.
Section 9. PROTECTIVE PROVISIONS. So long as shares of Series C
Preferred Stock are outstanding, the Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by Delaware Law)
of the holders of at least a majority of the then outstanding shares of Series C
Preferred Stock:
(a) alter or change the rights, preferences or privileges of the shares of
Series C Preferred Stock or any Senior Securities so as to affect adversely the
Series C Preferred Stock;
(b) create any new class or series of stock having a preference over the
Series C Preferred Stock with respect to Distributions (as defined in Section 2
above); or
(c) do any act or thing not authorized or contemplated by this Designation
which would result in taxation of the holders of shares of the Series C
Preferred Stock under Section 305 of the Internal Revenue Code of 1986, as
amended (or any comparable provision of the Internal Revenue Code as hereafter
from time to time amended).
Section 10. STATUS OF REDEEMED OR CONVERTED STOCK. In the event any
shares of Series C Preferred Stock shall be redeemed or converted pursuant to
Section 5 or Section 6 hereof, the shares so converted or redeemed shall be
canceled, shall return to the status of authorized but unissued Preferred Stock
of no designated series, and shall not be issuable by the Corporation as Series
C Preferred Stock.
Section 11. PREFERENCE RIGHTS. Nothing contained herein shall be
construed to prevent the Board of Directors of the Corporation from issuing one
or more series of Preferred Stock with dividend and/or liquidation preferences
equal to or junior to the dividend and liquidation preferences of the Series C
Preferred Stock.
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FURTHER RESOLVED, that the statements contained in the foregoing
resolutions creating and designating the said Series C Preferred Stock and
fixing the number, powers, preferences and relative, optional, participating,
and other special rights and the qualifications, limitations, restrictions, and
other distinguishing characteristics thereof shall, upon the effective date of
said Series, be deemed to be included in and be a part of the certificate of
incorporation of the Corporation pursuant to the provisions of the Delaware
Business Corporation Act.
Signed on December 7, 1995
/s/ D. Scott Hagen
----------------------------------
D. Scott Hagen, Acting President
Attest:
/s/ D. Scott Hagen
- ----------------------------------
D. Scott Hagen, Secretary
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NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Preferred Stock)
The undersigned hereby irrevocably elects to convert ___ shares of Series C
Preferred Stock, represented by stock certificate No(s). (the "Preferred Stock
Certificates") into shares of common stock ("Common Stock") of Cortex
Pharmaceuticals, Inc., (the "Corporation") according to the conditions of the
Certificate of Designation of Series C Preferred Stock, as of the date written
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates. No fee will be charged to
the Holder for any conversion, except for transfer taxes, if any.
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Series C Preferred Stock shall be made in compliance with
Regulation S, pursuant to registration of the Common Stock under the Securities
Act of 1933, as amended (the "Act") or pursuant to an exemption from
registration under the Act.
Date of Conversion:_____________________
Applicable Conversion Price:____________
Signature:______________________________
Name:___________________________________
Address: _______________________________
* No shares of Common Stock will be issued until the original Series C
Preferred Stock Certificate(s) to be converted and the Notice of Conversion
are received by the Transfer Agent.
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CORTEX PHARMACEUTICALS, INC.
REGULATION S SECURITIES SUBSCRIPTION AGREEMENT
THE PREFERRED STOCK BEING SUBSCRIBED FOR HEREIN AND THE COMMON STOCK
ISSUABLE UPON CONVERSION OF THE PREFERRED STOCK (COLLECTIVELY THE "SECURITIES")
HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, (THE "ACT") OR THE
SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE SECURITIES LAW. THEY ARE
BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION S
("REGULATION S") PROMULGATED UNDER THE ACT . THE SECURITIES MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO U.S. PERSONS (AS SUCH
TERM IS DEFINED IN REGULATION S) UNLESS THE SECURITIES ARE REGISTERED UNDER THE
ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS
ARE MADE PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THOSE LAWS, INCLUDING WITHOUT LIMITATION RULE 144A.
THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. INVESTMENT IN SUCH SECURITIES INVOLVES A HIGH DEGREE OF RISK. IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND THE
RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED, APPROVED OR
DISAPPROVED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT REVIEWED, PASSED
UPON, CONFIRMED OR DETERMINED THE ACCURACY OR ADEQUACY OF THIS DOCUMENT OR
ANY INFORMATION PROVIDED BY THE COMPANY TO POTENTIAL INVESTORS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Regulation S Securities Subscription Agreement (the "Agreement") is
executed by the undersigned (the "Subscriber") in connection with the offer and
subscription by the undersigned for 10% Series C Convertible Preferred Stock
$.001 par value (the "Preferred Stock") of Cortex Pharmaceuticals, Inc., a
Delaware corporation (the "Company"). The Preferred Stock is being offered at a
purchase price of $25,000 per Preferred Share, in minimum subscription amounts
of at least 2 shares ($50,000) and increments of 1 share ($25,000) in excess
thereof, up to a maximum amount of 160 shares of Preferred Stock, or $4.0
million (the "Offering"). The terms of the Preferred Stock, including the terms
on which the Preferred Stock may be converted into common stock, $.001 par value
of the Company (the "Common Stock"), are set forth in the Certificate of
Designation of Series C convertible Preferred Stock (the "Certificate of
Designation"), in substantially the form attached hereto as Exhibit A. The
solicitation of this Subscription and, if accepted by the Company, the offer and
sale of Preferred Stock, are being made in reliance upon the
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provisions of Regulation S ("Regulation S") promulgated under the United States
Securities Act of 1933, as amended (the "Act"). The Preferred Stock, and the
Common Stock issuable upon conversion thereof (the "Shares"), are sometimes
referred to herein collectively as the "Securities." The Subscriber wishes to
subscribe for Preferred Stock in the amount set forth in Section 17 in
accordance with the terms and conditions of the form of Preferred Shares and
this Agreement. It is agreed as follows:
1. OFFER TO SUBSCRIBE; PURCHASE PRICE AND CLOSING
The Subscriber hereby offers to subscribe for and purchase Preferred Stock,
for the aggregate purchase price set out in Section 17 of this Agreement.
Subscriber agrees that Company may reduce the aggregate amount of Preferred
Stock subscribed for pursuant hereto if, in the Company's discretion, the
Offering is over-subscribed or such reduction is necessary to avoid seeking
shareholder approval of the Offering under NASDAQ rules. Assuming that the
minimum placement amount of $3 million (or less, if accepted by the Company) and
corresponding subscription agreements accepted by the Company are received into
the Company's designated escrow account for this Offering (the "Escrow Account")
by December 15, 1995 (the "Offering Termination Date"), the closing as to each
Subscriber (the"Closing") shall be deemed to occur when this Agreement has been
executed by both the Subscriber and the Company and payment shall have been
made by the Subscriber, by wire transfer, as directed in writing by the Company,
to the Company's designated escrow account, for payment in consideration for the
Company's delivery of certificates representing the Preferred Stock subscribed
for. If the Closing does not occur on or prior to the Offering Termination
Date, the Escrow Agent will be instructed to release to Subscriber its
subscription payment, with interest accrued from receipt of such payment into
the Escrow Account under the terms of the Escrow Account, as soon as practicable
thereafter in accordance with wire instructions provided by Subscriber.
2. REPRESENTATIONS; ACCESS TO INFORMATION; INDEPENDENT INFORMATION;
INDEPENDENT INVESTIGATION
2.1 OFFSHORE TRANSACTION. The Subscriber represents and warrants to the
Company that (i) the Subscriber is not a "U.S. person" as that term is
defined in Rule 902(o) of Regulation S (a copy of which definition is
attached as Exhibit B) including, without limitation if a business
organization, such as a corporation or partnership, (a) it is
organized under the laws of a jurisdiction other than the United
States and (b) if organized by a "U.S. Person" principally for the
purpose of investing in securities not registered under the Act, it
was organized and is owned by accredited investors (as defined in Rule
501(a) of Regulation D under the Act) who are not natural persons,
estates or trusts; (ii) the Securities were not offered to the
Subscriber in the United States and at the time of execution of this
Subscription Agreement and the time of any offer to the Subscriber to
purchase the Securities hereunder, the Subscriber was physically
outside the United States; (iii) the Subscriber is purchasing the
Securities for its own account and not on behalf of or for the benefit
of any U.S. person and the sale and resale of the Securities have not
been
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prearranged with any U.S. person or buyer in the United States; (iv)
the Subscriber agrees, and to the best knowledge of the Subscriber
each distributor, if any, participating in the offering of the
Securities, has agreed, that all offers and sales of the Securities
prior to the expiration of a period commencing on the date of the last
Closing of a sale and purchase of Preferred Stock (the "Last Closing")
and ending forty days thereafter (the "Restricted Period") shall not
be made to U.S. persons or for the account or benefit of U.S. persons
and shall otherwise be made in compliance with the provisions of
Regulation S. Subscriber is not a distributor or dealer with respect
to the Securities.
2.2 SUBSCRIBER'S INDEPENDENT INVESTIGATION. The Subscriber, in offering
to subscribe for the Securities hereunder, has relied solely upon an
independent investigation made by it and its representatives, if any,
and has, prior to the date hereof, been given access to and the
opportunity to examine all books and records of the Company, and all
material contracts and documents of the Company which have been filed
as exhibits to the Company's filings made under the Act and the
Securities Exchange Act of 1934, as amended. In making its investment
decision to purchase the Preferred Stock, the Subscriber is not
relying on any oral or written representations or assurances from the
Company or any other person or any representation of the Company or
any other person other than as set forth in this Agreement, or on any
information other than that contained or incorporated by reference in
the Company's (i) Annual Report as Form 10-KSB for the year ended June
30, 1995 and (ii) Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1995. The Subscriber has such experience in
business and financial matters that it is capable of evaluating the
risk of its investment and determining the suitability of its
investment. The Subscriber is an accredited investor as defined in
Rule 501 of Regulation D, a copy of which definition is attached
hereto as Exhibit C.
2.3 SUBSCRIBER'S ECONOMIC RISK. The Subscriber understands and
acknowledges that an investment in the Securities involves a high
degree of risk. The Subscriber represents that the Subscriber is able
to bear the economic risk of an investment in the Securities, which
Subscriber acknowledges are currently illiquid and may remain
illiquid indefinitely, including a possible total loss of investment.
In making this statement the Subscriber hereby represents and warrants
to the Company that the Subscriber has adequate means of providing for
the Subscriber's current needs and contingencies; the Subscriber is
able to afford to hold the Securities for an indefinite period and the
Subscriber further represents that the Subscriber has such knowledge
and experience in financial and business matters that the Subscriber
is capable of evaluating the merits and risks of the investment in the
Securities to be received by the Subscriber. Further, the Subscriber
represents, as of the date of signing this Agreement, that the
Subscriber has no present need for liquidity in the Securities and the
Subscriber is willing to accept such investment risks.
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2.4 NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Subscriber understands
that no United States federal or state agency, or similar agency of
any other country, has reviewed, approved, passed upon or made any
recommendation or endorsement of the Company, the Offering or the
subscription of the Securities.
2.5 NO DIRECTED SELLING EFFORTS IN REGARD TO THIS TRANSACTION. To the
best of the knowledge of the Subscriber and Company, neither the
Company nor any distributor participating in the Offering, nor any
person acting for the Company or any such distributor, has conducted
any "directed selling efforts" in the United States as the term
"directed selling efforts" is defined in Rule 902 of Regulation S,
which in general, means any activity undertaken for the purpose of, or
that could reasonably be expected to have the effect of, conditioning
the market in the United States for any of the Securities being
offered. Such activity includes, without limitation, the mailing of
printed material to investors residing in the United States, the
holding of promotional seminars in the United States, and the
placement of advertisements with radio or television stations
broadcasting in the United States or in publications with a general
circulation in the United States, which discuss the offering of the
Securities.
2.6 COMPANY'S RELIANCE ON REPRESENTATIONS OF SUBSCRIBERS. This Agreement
is made by the Company with each Subscriber in reliance upon such
Subscriber's representations and covenants made in this Section 2,
which reliance by his execution of this Agreement the Subscriber
hereby confirms.
2.7 SECURITIES NOT REGISTERED UNDER SECURITIES ACT. Subscriber
understands that the Preferred Stock and the Common Stock issuable
upon conversion of the Preferred Stock (the "Shares") have not been
registered under the Act or any state securities laws ("State Acts")
and are being offered and sold pursuant to Regulation S based in part
upon the representations of Subscriber contained herein. The Common
Stock does, however, carry certain registration rights as set forth in
the Registration Rights Agreement executed by the parties hereto.
2.8 NO PUBLIC SOLICITATION. Subscriber knows of no public solicitation or
advertisement of an offer in connection with the proposed issuance and
sale of the Securities.
2.9 INVESTMENT INTENT (INCLUDING NO PRESENT INTENT TO SELL SECURITIES AT
PRE-DETERMINED TIME). Subscriber is acquiring the Preferred Stock to
be issued and sold hereunder (and the Shares issuable upon conversion
of the Preferred Stock) for his, her or its own account (or a trust
account if such Subscriber is a trustee) for investment and not as a
nominee and not with a view to the distribution thereof. Subscriber
understands that Subscriber must bear the economic risk of this
investment indefinitely unless such Preferred Stock or such Shares are
registered pursuant to the Act and any applicable State Acts,
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<PAGE>
or an exemption from such registration is available, and that the
Company has no present intention of registering any such sale of the
Preferred Stock or such Shares. Subscriber represents and warrants to
the Company, as of the date of this Agreement, that it intends to hold
the Preferred Stock (and the Shares issued upon conversion of the
Preferred Stock) and that Subscriber has no present plan or intention
to sell the Preferred Stock or the Shares in the United States at any
predetermined time, and has made no predetermined arrangements to sell
the Preferred Stock or the Shares. Subscriber covenants that neither
Subscriber nor its affiliates nor any person acting on its or their
behalf has entered, has the intention of entering, or will enter into
any put option, short position or other similar instrument or position
in the U.S. with respect to the Preferred Stock or Common Stock of the
Company anytime after receipt of the term sheet concerning this
Regulation S Offering until the end of the Restricted Period, or for
purposes of lowering the price at which the Preferred Stock are
convertible into Shares and neither Subscriber nor any of its
affiliates nor any person acting on its or their behalf will at any
time use Shares acquired upon conversion of the Preferred Stock to
settle/cover any put option, short position or other similar
instrument or position.
2.10 SUBSCRIBER NOT TO SELL OR TRANSFER SECURITIES IN VIOLATION OF THE
SECURITIES LAWS. Subscriber covenants that he, she or it will not
make any sale, transfer or other disposition of the Preferred Stock
or the Shares in violation of the Act (including Regulation S), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), any
applicable State Acts or the rules and regulations of the Securities
and Exchange Commission (the "Commission") or of any state securities
commissions or similar state authorities promulgated under any of the
foregoing.
2.11 SUBSCRIBER'S POWER AND AUTHORITY. Subscriber has the full power and
authority to execute, deliver and perform this Agreement. This
Agreement, when executed and delivered by Subscriber, will constitute
a valid and legally binding obligation of Subscriber, enforceable in
accordance with its terms.
2.12 SIGNATORY'S REPRESENTATION. The signatory to this Agreement hereby
represents and warrants that he, she or it is
(a) the Subscriber, who is not a U.S. Person (as defined in
Regulation S), and is not located in the U.S. at the time of
signing this Agreement.
If the signatory to this Agreement does not meet the requirement
in sub-section (a) herein, signatory represents he, she or it is:
(b) a professional fiduciary of Subscriber (as described in Section
(o)(2) through (o)(4) of Rule 902 of Regulation S), acting solely
in his capacity as holder of such account, as a fiduciary,
executor or trustee,
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and has completed and signed the accompanying Certificate
(Exhibit D) and forwarded it to Swartz Investments, Inc.
2.13 NO TAX ADVICE FROM COMPANY. Subscriber has reviewed with his, her or
its own tax advisors the foreign, U.S. federal, state and local tax
consequences of this investment, and the transactions contemplated by
this Agreement. Subscriber is relying solely on such advisors and not
on any statements or representations of the Company or any of its
agents and understands that Subscriber (and not the Company) shall be
responsible for the Subscriber's own tax liability that may arise as a
result of this investment or the transactions contemplated by this
Agreement.
2.14 NO LEGAL ADVICE FROM COMPANY. Subscriber acknowledges that he, she,
or it has had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with his, or her or its
own legal counsel. Subscriber is relying solely on such counsel and
not on any statements or representations of the Company or any of its
agents for legal advice with respect to this investment or the
transactions contemplated by this Agreement, except for the
representations, warranties and covenants set forth herein and in the
opinion provided for in paragraph 7.3 herein.
2.15 OFFERING MATERIAL STATEMENTS. Subscriber acknowledges and agrees that
all offering materials and documents used in connection with the
offers and sales of the Securities to it included statements to the
effect of those contained in the first full capitalized paragraph of
this Agreement.
2.16 NO SCHEME TO EVADE REGISTRATION. Subscriber's acquisition of the
Securities is not a transaction (or any element of a series of
transactions) that is part of a plan or scheme to evade the
registration provisions of the Act.
3. RESALES OF SECURITIES BY SUBSCRIBER
Subscriber acknowledges, covenants and agrees that the Securities may and
will only be resold by it (a) in compliance with Regulation S and applicable
State Acts, if any; or (b) pursuant to an exemption from registration under the
Act and applicable State Acts, if any; or (c) pursuant to an effective and
current Registration Statement under the Act. In addition, in connection with
any resale of the Preferred Stock in accordance with clause (a) or (b), above,
the Subscriber will deliver to the Company and will cause the purchaser to
deliver to the Company the following documents:
3.1 DOCUMENTS TO BE DELIVERED FOR OFFSHORE REGULATION S RESALES. If the
Preferred Stock are being resold in compliance with Regulation S:
(i) Sales Agreement, executed by Subscriber and Purchaser (in
the form of Exhibit E);
(ii) Seller Representation Letter (in the form of Exhibit F);
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(iii) Assignment Separate from Certificate (in the form of
Exhibit G)(or endorsed Certificates);
(iv) Resolution Authorizing Sale (in the form of Exhibit H), if
the Subscriber is an entity;
(v) Seller's Instruction Letter (in the form of Exhibit I);
and
(vi) Purchaser Representation Letter (in the form of
Exhibit J).
3.2 DOCUMENTS TO BE DELIVERED FOR RESALES INTO THE UNITED STATES. If the
Preferred Stock are being resold pursuant to an exemption from
registration under the Act other than Regulation S:
(i) Sales Agreement, executed by both Subscriber and Purchaser
(in the form of Exhibit E);
(ii) Seller Representation Letter (in the form of Exhibit K);
(iii) Assignment Separate from Certificate (in the form of
Exhibit G) (or endorsed Certificates);
(iv) Resolution Authorizing Sale (in the form of Exhibit H), if
the Subscriber is an entity;
(v) Seller's Instruction Letter (in the form of Exhibit I);
and
(vi) Purchaser Representation Letter (in the form of
Exhibit J).
Upon receipt of the executed documents listed above, the Company will
effect the transfer of the Preferred Stock on the Company's books and will
issue and deliver new Preferred Stock in the purchaser's name within three
(3) business days of such receipt. The provisions of this Section 3 shall
not apply to subsequent resales of Preferred Stock that have been sold by
Subscriber in compliance with this Section 3.
4. LEGENDS; SUBSEQUENT SALE OF SECURITIES
4.1 The certificates representing the Preferred Stock shall bear the first
legend set forth on the first page of this Agreement and any other
legend or legends as reasonably required to comply with the state,
U.S. federal or foreign law.
4.2 Assuming that there are no changes in the material facts set forth in
Section 2 of this Agreement or applicable law from the date hereof
until the Date of Conversion of the Preferred Stock by Subscriber and
sale of the Shares obtained upon conversion, the Shares so obtained
shall not bear any restrictive legend, nor shall any stop order be
placed on the books of the transfer agent, provided the Subscriber
shall deliver to the Company a Seller Representation Letter (in the
form of Exhibit K). Upon the submission, at any time after the
expiration of 40 days after the Last Closing, by Subscriber of a
written request for legend removal together with the certificate(s)
representing the Preferred Stock for which legend removal is being
requested and a Certificate in the form of Exhibit L, the Company
shall immediately re-issue the Preferred Stock certificate without any
restrictive legend, and the Company shall instruct its transfer agent
to do so, assuming that there are no changes in the material
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facts set forth in Section 2 of this Agreement or applicable law from
the date hereof until the date of such submission.
5. NOTICE OF ISSUANCE OF SECURITIES
The Company will not issue any debt or equity securities for cash in public
or private capital raising transactions ("Future Offerings") for a period
of seventy five (75) days after the Closing without obtaining the prior
written approval of Subscribers holding a majority of the purchase price
of Preferred Stock then outstanding. Furthermore, the Company will not
conduct any Future Offerings for a period of two hundred and forty (240)
days after the Closing without delivering to the Subscriber, at least seven
(7) days prior to the closing of such issuance, written notice describing
the proposed issuance and the terms upon which such securities are being
issued, and providing the Subscriber the option during such seven (7) day
period to purchase the securities being offered in the Offerings on the
same terms as contemplated by such Offerings and in the amount set forth
below (the limitations referred to in this and the immediately preceding
sentence are collectively referred to as the "Capital Raising Limitation").
The Capital Raising Limitation shall not apply to any transaction
involving the Company's commercial banking arrangements or issuances of
securities in connection with a merger, consolidation or sale of assets, or
in connection with or as part of the same transaction as a joint venture or
other acquisition or disposition of a business, a product or a license by
the Company or exercise of options by employees, consultants or directors
or any transaction with a strategic corporate partner. The Capital Raising
Limitation also shall not apply to the issuance of securities upon exercise
or conversion of the Company's options, warrants or other convertible
securities outstanding as of November 24, 1995, or to the grant of
additional options or warrants, or the issuance of additional securities,
under any Company stock option or restricted stock plan. The amount of
securities which a Subscriber is entitled to purchase in such a Future
Offering shall be a number obtained by multiplying the aggregate amount of
securities being offered in the Future Offering by a fraction, the
numerator of which is the purchase price of the Preferred Stock purchased
by the Subscriber pursuant to this Agreement and the denominator of which
is the aggregate dollar amount of Preferred Stock placed in the Offering.
6. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Subscriber as follows:
6.1 ORGANIZATION, GOOD STANDING, AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, USA and has all requisite
corporate power and authority to carry on its business as now
conducted and as proposed to be conducted. The Company is duly
qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material
adverse effect on the business or properties of the Company and its
subsidiaries taken as a whole. The Company, to its knowledge is not
the
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subject of any pending or threatened investigation or administrative
or legal proceeding by the Internal Revenue Service, the taxing
authorities of any state or local jurisdiction, or the Securities and
Exchange Commission which have not been disclosed in the reports
referred to in Section 6.5 below.
6.2 CORPORATE CONDITION. The Company's condition was, in all material
respects, as described in the Company's reports filed pursuant to the
Exchange Act and provided to Subscriber in accordance with Section 2.2
above as of the dates of such reports. There have been no material
adverse changes in the Company's financial condition or business since
the date of the latest report, except as described in the Company's
press releases, copies of which have been provided to Subscriber.
6.3 AUTHORIZATION. All corporate action on the part of the Company by its
officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder and the authorization, issuance
(or reservation for issuance) and delivery of the Preferred Stock
being sold hereunder and issuance of the Common Stock obtainable on
conversion of the Preferred Stock have been taken, and this Agreement
and the Registration Rights Agreement constitutes a valid and legally
binding obligation of the Company, enforceable in accordance with its
terms.
6.4 VALID ISSUANCE OF PREFERRED STOCK AND COMMON STOCK. The Preferred
Stock, when issued, sold and delivered in accordance with the terms
hereof for the consideration expressed herein, will be validly issued,
fully paid and nonassessable and, based in part upon the
representations of the Subscriber in this Agreement, will be issued in
compliance with all applicable U.S. federal and state securities laws.
The Common Stock issuable upon conversion of the Preferred Stock when
issued in accordance with the terms of the Preferred Stock shall be
duly and validly issued and outstanding, fully paid and nonassessable,
and based in part on the representations and warranties of Subscriber
and any transferee of the Preferred Stock, will be issued in
compliance with all applicable U.S. federal and state securities laws.
6.5 CURRENT PUBLIC INFORMATION. The Company represents and warrants to
the Subscriber that the Company is a "reporting issuer" as defined in
Rule 902(1) of Regulation S and it has a class of securities
registered under Section 12(b) or 12(g) of the Exchange Act or is
required to file reports pursuant to Section 15(d) of the Exchange
Act, and has filed all the materials required to be filed as reports
pursuant to the Exchange Act for a period of at least twelve months
preceding the date hereof (or for such shorter period as the Company
was required by law to file such material), and all such filings have
been made on a timely basis. The Company undertakes to furnish the
Subscriber with copies of such information as may be reasonably
requested by the Subscriber prior to consummation of this Offering.
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6.6 NO SECURITIES OFFERED IN U.S. OR TO ANY U.S. PERSON. The Company
represents that it has not offered the Preferred Stock to the
Subscriber in the U.S. or, to the best knowledge of the Company, to
any person in the United States or any U.S. Person (as defined in
Regulation S).
6.7 CAPITALIZATION STRUCTURE OF THE COMPANY. The capitalization of
Company, as of the date of the Closing, as set forth in Exhibit M.
6.8 TERMINATION DATE OF OFFERING. In no event shall the Last Closing of a
sale of a Preferred Stock occur later than December 15, 1995.
6.9 USE OF PROCEEDS. As of the date hereof, the Company expects to use
the proceeds from this Offering (less fees and expenses) for the
purposes and in the approximate amounts set forth in Exhibit N hereto.
These purposes and amounts are estimates and are subject to change.
6.10 LIQUIDATED DAMAGES FOR LATE CONVERSION. As set forth in the
Certificate of Designation, the Company shall use all reasonable
efforts to issue and deliver, within three (3) business days after the
Subscriber has fulfilled all conditions and submitted all necessary
documents duly executed and in proper form, required for conversion
(the "Deadline"), to such Holder of Series C Preferred Stock at the
address of the Holder on the books of the Company, a certificate or
certificates for the number of shares of Common Stock to which the
Holder shall be entitled upon submission of a notice of conversion.
The Company understands that a delay in the issuance of the Shares of
Common Stock beyond the Deadline could result in economic loss to the
Holder. As compensation to the Holder for such loss, the Company
agrees to pay liquidated damages to the Holder for late issuance of
Shares upon Conversion in accordance with the following schedule
(where "No. Business Days Late" is defined as the number of business
days beyond 5 business days from the date of receipt by the Company of
a notice of conversion and the transfer agent of all necessary
documentation duly executed and in proper form required for
conversion, including the original certificate representing the
Preferred Shares to be converted, all in accordance with the
subscription documents and the requirements of the transfer agent):
No. Business Days Late Liquidated Damages
1 $500
2 $1,000
3 $1,500
4 $2,000
5 $2,500
6 $3,000
7 $3,500
8 $4,000
10
<PAGE>
9 $4,500
10 $5,000
>10 $5,000 + $1,000
for each Business Day Late beyond
10 days
The Company shall pay any liquidated damages incurred under this Section by
check within 7 business days from the date of issuance of Shares.
6.11 PAYMENT OF ACCRUED INTEREST ON FUNDS IN ESCROW. The Company shall pay
interest to each Subscriber for the use of Subscriber's funds prior to
the Last Closing in an amount equal to 10% of the Original Series C
Issue Price (which is $25,000 per share) per annum for the period
commencing on the date that, in connection with the consummation of
the initial purchase by Subscriber of its shares of Series C Preferred
Stock from the Company, the escrow agent first had in its possession
funds representing full payment for such shares of Series C Preferred
Stock and ending on the Last Closing Date. Such payment shall be made
by the Company to Subscriber, by check, within 7 days of the date of
the Last Closing.
7. COVENANTS OF COMPANY
7.1 INDEPENDENT AUDITORS. The Company shall, until at least December 6,
1997, maintain as its independent auditors an accounting firm
authorized to practice before the SEC.
7.2 CORPORATE EXISTENCE AND TAXES. The Company shall, until at least the
earlier of December 6, 1997, or the conversion or redemption of the
Preferred Stock purchased pursuant to this Agreement maintain its
corporate existence in good standing (provided, however, that the
foregoing covenant shall not prevent the Company from entering into
any merger or corporate reorganization as long as the surviving entity
in such transaction, if not the Company, assumes the Company's
obligations with respect to the Preferred Stock) and shall pay all its
taxes when due except for taxes which the Company disputes.
7.3 OPINION OF COUNSEL. Subscriber shall, upon purchase of the Preferred
Stock, receive an opinion letter from outside counsel to the Company,
to the effect that (i) the Company is duly incorporated and validly
existing under the laws of Delaware; (ii) this Agreement, the
Registration Rights Agreement, the issuance of the Preferred Stock,
and (assuming there are sufficient authorized shares) the issuance of
the Common Stock upon conversion of the Preferred Stock have been duly
authorized by all required corporate action, and that all such Shares,
upon delivery, shall be validly issued and outstanding, fully paid and
nonassessable; (iii) this Agreement and the Registration Rights
Agreement constitutes valid and binding obligations of the Company,
enforceable in accordance with their terms, except as enforceability
of any indemnification
11
<PAGE>
provisions may be limited by principles of public policy, and subject
to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of laws governing specific performance
and other equitable remedies; and (iv) based upon the representations
and warranties of the Subscribers contained in the Regulation S
Subscription Agreements entered into in connection with the Offering,
and assuming that no Subscriber is engaged in a plan or scheme to
evade the registration requirements of the Act, the issuance of the
Preferred Stock has been effected in compliance with Regulation S, and
the issuance of the Shares upon conversion of the Preferred Stock in
accordance with their terms by the holders of the Preferred Stock
(assuming that no commission or other remuneration is paid or given,
directly or indirectly, for soliciting such conversion) will not be
subject to the registration provisions of the Act.
7.4 REGISTRATION RIGHTS. The Company will grant Subscriber the
registration rights covering the Common Stock issuable on conversion
of the Preferred Stock on substantially the terms of the Registration
Rights Agreement attached hereto as Exhibit O.
7.5 NOTIFICATION OF FINAL CLOSING DATE & RESTRICTED PERIOD BY COMPANY.
Within three (3) business days after the final closing (the date of
the final Closing of this Offering), the Company shall notify the
Subscriber in writing that the final Closing has occurred, the date of
the final Closing, the date upon which the 40 day Restricted Period
will terminate with respect to the Securities, and the value of the
fixed strike price, as that term is defined in the Preferred Shares.
8. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of California, U.S.A., applicable to agreements made in and
wholly to be performed in that jurisdiction, except for matters arising under
the Act or the Exchange Act which matters shall be construed and interpreted in
accordance with such laws. Any action brought to enforce, or otherwise arising
out of, this Agreement shall be heard and determined only in either a federal or
state court sitting in the County of Orange in the State of California, U.S.A.
9. ENTIRE AGREEMENT; WRITTEN AMENDMENTS REQUIRED
This Agreement, the Preferred Stock, the Registration Rights Agreement and
the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and no party shall be liable or bound to any other party in
any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
12
<PAGE>
10. WRITTEN NOTICES, ETC.
Any notice, demand or request required or permitted to be given by either
the Company or the Subscriber pursuant to the terms of this Agreement shall be
in writing and shall be deemed given when delivered personally, or by facsimile
(with a hard copy to follow by two day courier), addressed to the parties at the
addresses and/or facsimile telephone number of the parties set forth at the end
of this Agreement or such other address as a party may request by notifying the
other in writing.
11. EXECUTION IN COUNTERPARTS PERMITTED
This Agreement may be executed in any number of counterparts, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.
12. SEVERABILITY OF AGREEMENT
In the event that any provision of this Agreement becomes or is declared by
a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision;
provided that no such severability shall be effective if it materially changes
the economic benefit of this Agreement to any party.
13. TITLES AND SUBTITLES; GENDER
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
The use in this Agreement of a masculine, feminine or neither pronoun shall be
deemed to include a reference to the others.
14. EXACT REGISTERED NAME OF SECURITY HOLDER; OFFSHORE DELIVERY INSTRUCTIONS
Subscriber agrees to provide Company with the exact name in which it wishes
the Securities to be registered by providing that information on the
accompanying signature page of this Agreement. Additionally, Subscriber also
agrees to provide Company with detailed delivery instructions to an offshore
addressee and will also provide that information on the accompanying signature
page of this Agreement.
15. SUBSCRIBER TO FORWARD ORIGINAL SIGNED SUBSCRIPTION AGREEMENT TO COMPANY
Subscriber agrees to courier to Company his, her or its original inked
signed Subscription Agreement within 2 days of faxing said signed agreement to
placement agent, Swartz Investments, Inc.
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<PAGE>
16. ASSIGNMENT.
Subscriber may not assign this Agreement without the written consent of
Company (which may be withheld for any reason). This provision does not limit
the Subscriber's right to transfer the Securities pursuant to the terms of the
Preferred Shares and this Agreement.
[See following page for provisions regarding the amount of your
subscription, the exact name in which the security is to be issued, and offshore
delivery instructions.]
17. AMOUNT
The undersigned hereby subscribes for $________________ purchase price of
Preferred Stock, and pays herewith funds in the amount of
____________________________ U.S Dollars ($______________U.S.).
14
<PAGE>
The undersigned acknowledges that this Agreement and the subscription
represented hereby shall not be effective unless accepted by the Company as
indicated below.
Dated this _____ day of ___, 1995.
_________________________________ _______________________________________
Your Signature EXACT NAME IN WHICH YOU WANT
THE SECURITIES TO BE REGISTERED
(Please PRINT Exact Registered Name)
_________________________________ OFFSHORE DELIVERY INSTRUCTIONS:
Name: Please Print
Please type or print address where your
security is to be delivered
ATTN:___________________________________
________________________________ ________________________________________
Title/Representative Capacity Street Address
(if applicable)
________________________________ ________________________________________
Name of Company You Represent Street Address
(if applicable)
________________________________ ________________________________________
Place of Execution of this Agreement City, State or Province, Country
________________________________________
Offshore Postal Code
________________________________________
Phone Number (For Federal Express)
________________________________________
Facsimile Number (re: Notice)
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE ____ DAY OF
________________ 1995.
15
<PAGE>
CORTEX PHARMACEUTICALS, INC.
By:________________________________
(Your Signature)
Print Name:________________________
Title:_____________________________
16
<PAGE>
EXHIBIT D
FIDUCIARY, EXECUTOR OR TRUSTEE CERTIFICATE
NATURE OF SIGNATORY. The signatory to this Agreement hereby represents and
warrants that he, she or it is either
(a) the Subscriber, who is not a U.S. Person (as defined in Regulation S)
and is not located in the U.S. at the time of signing this Agreement,
_____________________________________________
(signature)
OR
(b) a professional fiduciary of Subscriber (as described in Section o(2)
through (o)(4) of Rule 902 of Regulation S), acting solely in his capacity as
holder of such account, in which case:
(i) After due inquiry the Subscriber is not a U.S. Person (as defined
in Regulation S); and
(ii) either (sign either A, B or C, as applicable):
A. The account for which the Securities are being purchased by
Subscriber is a discretionary account which the undersigned
manages and holds for the benefit or account of Subscriber
and the Subscriber is not located in the U.S. at the time of
signing this Agreement;
_____________________________________________
(signature)
OR
B. The account for which the Securities are being purchased by
Subscriber is the account of an estate of which the
undersigned acts as executor, provided that an executor or
administrator who is not a U.S. person has sole or shared
investment discretion with respect to the assets of the
estate, and the estate is governed by foreign law and
provided further that the Subscriber is not located in the
U.S. at the time of signing this Agreement;
_____________________________________________
(signature)
17
<PAGE>
OR
C. The account for which the securities are being purchased by
Subscriber is the account of a trust of which the undersigned
acts as trustee, provided that a trustee who is not a U.S. Person
(as defined in Regulation S) has sole or shared investment
discretion with respect to the trust assets, and no beneficiary
of the trust (and no settlor if the trust is revocable) is a U.S.
Person (as defined in Regulation S) and provided further that the
Subscriber is not located in the U.S. at the time of signing this
Agreement.
_____________________________________________
(signature)
______________________________ _____________________________________________
Print Your Name Person or Entity for Whom You are Signing
18
<PAGE>
FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
December 8, 1995, by and among Cortex Pharmaceuticals, a Delaware corporation
("Company") Swartz Investments, Inc., a Georgia corporation ("Swartz
Investments") and the subscribers ("Investors") to the Company's offering
("Offering") of up to $4 million of Series C Preferred Stock (the "Preferred
Stock") pursuant to Regulation S.
1. DEFINITIONS. For purposes of this Agreement:
(a) The term "register", "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933 (the "Act"), and
the declaration or ordering of effectiveness of such registration statement or
document;
(b) The term "Registrable Securities" means the Common Stock issuable or
issued upon (i) conversion of the Preferred Stock issued to Investors in the
Offering (the "Shares") and (ii) exercise of the Warrant (the "Warrant Shares");
provided, however, that Registrable Securities shall not include a) any Shares
or Warrant Shares that are, in the opinion of the Company's counsel, available
for sale under the Act without compliance with the registration and prospectus
delivery requirements of the Act, either by virtue of the availability of
Regulation S or otherwise, so that all transfer restrictions and restrictive
legends with respect thereto may be removed upon the consummation of such sale
or b) any Shares or Warrant Shares sold prior to the applicable date under a
Piggyback Registration as defined in Section 3.
(c) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock which have been
issued or are issuable upon conversion of the Preferred Stock or exercise of the
Warrant at the time of such determination;
(d) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any permitted assignee thereof; and
(e) The term "Warrant" means the warrant granted to Swartz Investments in
connection with the Offering.
2. REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after 90 days after the final
closing of the Offering, a written request from the Holders of Registrable
Securities obtained or obtainable upon conversion of at least $800,000 of
Preferred Stock (the "Initiating Holders"), that the Company file a registration
statement under the Act covering the registration of at least twenty percent
(20%) of the number of Registrable Securities then outstanding, then the Company
shall, within ten (10) days of the receipt thereof, give written notice of such
request to all Holders and shall, subject to the limitations of subsection 2(b),
effect as soon as practicable, and in any event within 75 days of the receipt of
such request, the registration under the Act of all Registrable Securities which
the Holders request, by notice given to the Company within (10) days of receipt
<PAGE>
of the Company's notice, to be registered as expeditiously as reasonably
possible after the mailing of such notice by the Company (a "Demand
Registration").
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 2
and the Company shall include such information in the written notice referred to
in subsection 2(a). In such event, the right of any Holder to include his
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
4(f)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders, and reasonably acceptable to the Company.
(c) The Company is obligated to effect only one demand registration
pursuant to Section 2 of this Agreement. Company agrees to include all
Registrable Securities held by all Holders (that are initiating Holders or have
notified the Company of their desire to be included in the registration
statement pursuant to 2(a) above) in such Registration Statement without cutback
or reduction. In the event the Company breaches its obligation of the preceding
sentences, any Holders of the Registrable Securities which were not included in
such Registration Statement shall be entitled to a second Demand Registration
for such excluded securities and shall keep the Registration Statement as
required by Section 5.
(d) The Company is not obligated to effect a demand registration under
this Section 2 if in the opinion of counsel to the Company reasonably acceptable
to the person or persons from whom written request for registration has been
received that registration under the Act is not required for the immediate
transfer of the Registrable Securities pursuant to Rule 144 or other applicable
provision.
3. COMPANY REGISTRATION. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
Common stock under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a registration on
Form S-4 promulgated under the Act or any successor or similar form registering
stock issuable on upon a reclassification, upon a business combination involving
an exchange of securities or upon an exchange offer for securities of the issuer
or another entity), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each Holder
given by fax within twenty (20) days after mailing of such notice by the
Company, which request shall state the intended method of disposition of such
shares by such Holder, the Company shall cause to be registered under the Act
all of the Registrable Securities that each such Holder has requested to be
registered (a "Piggyback Registration").
2
<PAGE>
4. LIMITATION ON OBLIGATIONS TO REGISTER.
In the case of a Piggyback Registration on underwritten public offering by
the Company, if the managing underwriter determines and advises in writing that
the inclusion to be included would interfere with the successful marketing of
the securities proposed to be registered by the Company, then the number of such
Registrable Securities to be included in the registration statement shall be
allocated among all Holder who had requested Piggyback Registration, in the
proportion that the number of Registrable Securities which each such Holder
[including Swartz Investments] seeks to register bears to the total number of
Registrable Securities sought to be included by all Holders [including Swartz
Investments]; provided that provided that in no event shall the number of
Registrable Securities be less than 20% of the total number of shares included
in such registration.
5. OBLIGATIONS OF THE COMPANY. Whenever required under this Agreement to
effect the registration of any Registrable Securities the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such registration
statement to become effective.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Use best efforts to keep such registration statement effective for a
period of at least 180 days and in any event until 90 days after all of the
Preferred Stock has been converted or redeemed.
(d) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(e) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders of the Registrable
Securities covered by such registration statement, provided that the Company
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.
(f) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
3
<PAGE>
(g) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the 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 the light of the circumstances then existing.
(h) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Agreement, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) in the event of any underwritten public
offering, an opinion, dated such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities; and, in the event of a public offering without an underwriter, an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, to the effect that the registration statement has
been declared effective, the Registrable Securities of the applicable Holders
have been included, and such Holders may sell the Registrable Securities so
covered by the registration statement (ii) in the event of any underwritten
public offering, 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 offering, addressed to the underwriters and to the Holders requesting
registration of Registrable Securities.
6. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities or to determine that registration is not
required pursuant to Rule 144 or other applicable provision of the Act.
7. EXPENSES OF DEMAND REGISTRATION. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to Section 2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company (up to a maximum of $5,000 for such
counsel fees), and including the reasonable fees and disbursements incurred of
only one counsel for the selling Holders, shall be borne by the Company;
provided, however, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
Holders who had requested such registration shall bear such expenses); provided
further, however, that if at the time of such withdrawal, the Holders have
learned of a material adverse change in the condition, business, or prospects of
the Company from that known to the Holders at the time of their request, then
the Holders shall not be required to pay any of such expenses and shall retain
their rights pursuant to Section 2.
4
<PAGE>
8. EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
3 for each Holder, including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto (and including the reasonable fees and disbursements incurred of only
one counsel for the selling Holders selected by them, up to a maximum of $5,000
for such counsel fees), but excluding underwriting discounts and commissions
relating to Registrable Securities.
9. INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, the officers and directors of each Holder, any underwriter
(as defined in the Act) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of the Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or violation
by the Company of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities law;
and the Company will reimburse each such Holder, officer or director,
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 subsection 8(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, officer, director, underwriter or
controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who controls the Company
within the meaning of the Act, any underwriter and any other Holder selling
securities in such registration statement or any of its directors or officers or
any person who controls such Holder, against any losses, claims, damages, or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, or underwriter or controlling person, or other such
Holder or director, officer or controlling person may become subject, under the
Act, the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by such
5
<PAGE>
Holder expressly for use in connection with such registration; and each such
Holder will reimburse any legal or other expenses reasonably incurred by the
Company and any such director, officer, controlling person, underwriter or
controlling person, other Holder, officer, director, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 8(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; provided, that, in no event shall any indemnity under this subsection
8(b) exceed the gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 8, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that all indemnified parties shall have the right to retain their own
counsel, who shall represent all such indemnified parties and who shall be
reasonably acceptable to the indemnifying party, with the reasonably incurred
fees and expenses to be paid by the indemnifying party, if representation of
such indemnified parties by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential differing interests between any
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 8, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 8.
(d) The obligations of the Company and Holders under this Section 8 shall
survive the redemption and conversion, if any, of the Preferred Stock, the
completion of any offering of Registrable Securities in a registration statement
under this Agreement, and otherwise.
10. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration, the Company
agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company, if
true, that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
6
<PAGE>
time after it has become subject to such reporting requirements), (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 requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration.
11. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of a majority of the Registrable
Securities. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each Holder, each future Holder, and the Company.
12. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement among the parties with
regard to the subjects hereof. The terms and conditions of this Agreement shall
inure to the benefit of, and be binding upon, the respective successors and
assigns of the parties. Nothing in this Agreement is intended to confer on any
third party any rights, liabilities or obligations, except as specifically
provided.
(b) The titles and subtitles used in this Agreement are for convenience
only and are not to be used in construing or interpreting the Agreement.
13. NOTICES. All notices required or permitted under this Agreement shall
be made in writing signed by the party making the same, shall specify the
section under this agreement Pursuant To Which It Is Given, And Shall Be
Addressed If To (I) The Company At: President, 15241 Barranca Parkway, Irvine,
CA 92718, Telephone No. (714)727-3157, Telecopy No. (714)727-3657 and (ii) the
Holders at their respective last address as the party shall have furnished in
writing as a new address to be entered on such register. Any notice, except as
otherwise provided in this Agreement, shall be made by fax and shall be deemed
given at the time of transmission of such fax.
14. TERMINATION. This Agreement shall terminate on the data that is five
years from the date of this Agreement; but without prejudice to (i) the parties'
rights and obligations arising from breaches of this Agreement occurring prior
to such termination or (ii) other indemnification obligations under this
Agreement.
15. ASSIGNMENT. No assignment, transfer or delegation, whether by
operation of law or otherwise, of any rights or obligations under this Agreement
by the Company or any Holder, respectively, shall be made without the prior
written consent of the majority in interest of the Holders or the Company,
respectively; provided that the rights of a Holder may be transferred to a
subsequent holder of the Holder's Registrable Securities (provided such
transferee shall provide to the Company, together with or prior to such
transferee's request to have such Registrable Securities included in a Demand
Registration or Piggyback Registration, a writing executed by such transferee
agreeing to be bound as a Holder by the terms of this Agreement); and provided
further that the Company may transfer its rights and obligations under this
Agreement to a purchaser of all or a substantial portion of its business if the
obligations of the
7
<PAGE>
Company under this Agreement are assumed in connection with such transfer,
either by merger or other operation of law (which may include without limitation
a transaction whereby the Registrable Securities are converted into securities
of the successor in interest) or by specific assumption executed by the
transferee.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, U.S.A. applicable to
agreements made in and wholly to be performed in that jurisdiction, except for
matters arising under the Act or the Securities Exchange Act of 1934, which
matters shall be construed and interpreted in accordance with such laws. Any
action brought to enforce, or otherwise arising out of, this Agreement shall be
heard an determined only in either a federal or state court sitting in the
county of Orange in the State of California, U.S.A.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
COMPANY
INVESTOR(S)
_____________________________
(Print Investor's Name)
By: _________________________ By: __________________________
D. Scott Hagen (Signature)
Acting President and CEO
Address: Address:
__________________________
15241 Barranca Parkway __________________________
Irvine, CA 92718 __________________________
Telephone No. (714)727-3157 __________________________
Telecopy No. (714)727-3657 __________________________
Telephone No. ( )_________
Telecopy No. ( )_________
8
<PAGE>
THIS CERTIFICATE AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNTIL EITHER (i) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE
WITH REGARD THERETO, OR (ii) THE CORPORATION SHALL HAVE RECEIVED AN OPINION OF
COUNSEL ACCEPTABLE TO THE CORPORATION AND ITS COUNSEL THAT AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
Warrant to Purchase
106,195 shares
WARRANT TO PURCHASE COMMON STOCK
OF
CORTEX PHARMACEUTICALS, INC.
THIS CERTIFIES that Swartz Investments, Inc. ("Holder") or any subsequent
holder hereof, has the right to purchase from Cortex Pharmaceuticals, Inc., a
Delaware Corporation (the "Company"), not more than 106,195 fully paid and
nonassessable shares of the Company's Common Stock, $.001 par value ("Common
Stock"), at a price of $2.825 per share subject to adjustment as provided below
(the "Exercise Price"), at any time on or before 5:00 p.m., Atlanta, Georgia
time, on December 6, 2000.
The holder of this Warrant agrees with the Company that this Warrant is
issued and all rights hereunder shall be held subject to all of the conditions,
limitations and provisions set forth herein.
1. EXERCISE.
This Warrant may be exercised as to all or any lesser number of full shares
of Common Stock covered hereby upon surrender of this Warrant, with the
Subscription Form attached hereto duly executed, together with the full Exercise
Price (as hereinafter defined) in cash, or by certified or official bank check
payable in New York Clearing House Funds for each share of Common Stock as to
which this Warrant is exercised, at the office of the Company, Attn: President,
Cortex Pharmaceuticals, Inc., 15241 Barranca Parkway Irvine, CA 92718, or at
such other office or agency as the Company may designate in writing, by
overnight mail, with an advance copy of the Subscription Form by facsimile (such
surrender and payment hereinafter called the "Exercise of this Warrant"). The
"Date of Exercise" of the Warrant shall be defined as the date that the advance
copy of the Subscription Form is sent by facsimile to the Company, provided that
the original Warrant and Subscription Form are received by the Company within
five business days thereafter.
<PAGE>
The original Warrant and Subscription Form must be received within 5 business
days of the Date of Exercise, or the Subscription Form MAY, AT THE COMPANY'S
OPTION, be considered void. This Warrant shall be canceled upon its Exercise,
and, as soon as practical AFTER THE DATE OF EXERCISE, the holder hereof shall be
entitled to receive a certificate or certificates for the number of shares of
Common Stock purchased upon such Exercise and a new Warrant or Warrants
(containing terms identical to this Warrant) representing any unexercised
portion of this Warrant. Each person in whose name any certificate for shares
of Common Stock is issued shall, for all purposes, be deemed to have become the
holder of record of such shares on the Date of Exercise of this Warrant,
irrespective of the date of delivery of such certificate. Nothing in this
Warrant shall be construed as conferring upon the holder hereof any rights as a
shareholder of the Company.
2. PAYMENT OF WARRANT EXERCISE PRICE.
Payment of the Exercise Price may be made by any of the following, or a
combination thereof, at the election of Holder:
(i) cash, certified check or cashiers check or wire transfer; or
(ii) surrender of this Warrant at the principal office of the Company
together with notice of election, in which event the Company shall issue Holder
a number of shares of Common Stock computed using the following formula:
X = Y (A-B)/A
where: X = the number of shares of Common Stock to be issued to Holder (not
to exceed the number of shares set forth on the cover page of this
Warrant, as adjusted pursuant to the provisions of Section 4 of
this Warrant).
Y = the number of shares of Common Stock for which this Warrant
is being exercised.
A = the Market Price of one share of Common Stock (for purposes of
this Section 2(ii), the "Market Price" shall be defined as the average
closing bid price of the Common Stock for the five trading days prior
to the Date of Exercise of this Warrant (the "Average Closing Bid
Price"), as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or if the Common Stock is not
traded on NASDAQ, the Average Closing Bid Price in the over-the-
counter market; provided, however, that if the Common Stock is listed
on a stock exchange, the Market Price shall be the Average Closing Bid
Price on such exchange).
B = the Exercise Price.
It is intended that the Common Stock issuable upon exercise of this Warrant in a
cashless exercise transaction shall be deemed to have been acquired at the time
this Warrant was
<PAGE>
issued, for purposes of Rule 144(d)(3)(ii).
3. TRANSFER AND REGISTRATION.
Subject to the provisions of Section 7 of this Warrant, this Warrant may be
transferred on the books of the Company, wholly or in part, in person or by
attorney, upon surrender of this Warrant properly endorsed, with signature
guaranteed. This Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant
transferred, and the holder of this Warrant shall be entitled to receive a new
Warrant or Warrants as to the portion hereof retained. The Common Stock issuable
upon the exercise of this Warrant constitute "Registrable Securities" under that
certain Registration Rights Agreement dated on or about December 6, 1995
between the Company and certain investors and, accordingly, has the benefit of
the registration rights pursuant to that agreement.
4. ANTI-DILUTION ADJUSTMENTS.
(a) If the Company shall at any time declare a dividend payable in
shares of Common Stock, then the holder hereof, upon Exercise of this Warrant
after the record date for the determination of holders of Common Stock entitled
to receive such dividend, shall be entitled to receive upon Exercise of this
Warrant, in addition to the number of shares of Common Stock as to which this
Warrant is Exercised, such additional shares of Common Stock as such holder
would have received had this Warrant been Exercised immediately prior to such
record date.
(b) If the Company shall at any time effect a recapitalization or
reclassification of such character that the shares of Common Stock shall be
changed into or become exchangeable for a larger or smaller number of shares,
then upon the effective date thereof, the number of shares of Common Stock which
the holder hereof shall be entitled to purchase upon Exercise of this Warrant
shall be increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of Common Stock by reason of such
recapitalization or reclassification, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionately decreased and, in
the case of a decrease in the number of shares, proportionally increased.
(c) If the Company shall at any time distribute to holders of Common
Stock cash, evidences of indebtedness or other securities or assets (other than
cash dividends or distributions payable out of earned surplus or net profits
for the current or preceding year) then, in any such case, the holder of this
Warrant shall be entitled to receive, upon exercise of this Warrant, with
respect to each share of Common Stock issuable upon such Exercise, the amount of
cash or evidences of indebtedness or other securities or assets which such
holder would have been entitled to receive with respect to each such share of
Common Stock as a result of the happening of such event had this Warrant been
Exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (the "Determination Date") or, in lieu thereof, if
the Board of Directors of the Company should so determine at the time of such
distribution, a reduced
<PAGE>
Exercise Price determined by multiplying the Exercise Price on the Determination
Date by a fraction, the numerator of which is the result of such Exercise Price
reduced by the value of such distribution applicable to one share of Common
Stock (such value to be determined by the Board in its discretion) and the
denominator of which is such Exercise Price.
(d) If the Company shall at any time consolidate or merge with any
other corporation or transfer all or substantially all of its assets, then the
Company shall deliver written notice to the Holder of such merger, consolidation
or sale of assets at least thirty (30) days prior to the closing of such merger,
consolidation or sale of assets and this Warrant shall terminate and expire
immediately prior to the closing of such merger, consolidation or sale of
assets.
(e) As used in this Warrant, the term "Exercise Price" shall mean the
purchase price per share specified in this Warrant until the occurrence of an
event stated in subsection (b) or (c) of this Section 4 and thereafter shall
mean said price as adjusted from time to time in accordance with the provisions
of said subsection. No such adjustment shall be made unless such adjustment
would change the Exercise Price at the time by $.01 or more; provided, however,
that all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $.01 or more. No
adjustment made pursuant to any provision of this Section 4 shall have the
effect of increasing the total consideration payable upon Exercise of this
Warrant in respect of all the Common Stock as to which this Warrant may be
exercised.
(f) In the event that at any time, as a result of an adjustment made
pursuant to this Section 4, the holder of this Warrant shall, upon Exercise of
this Warrant, become entitled to receive shares and/or other securities or
assets (other than Common Stock) then, wherever appropriate, all references
herein to shares of Common Stock shall be deemed to refer to and include such
shares and/or other securities or assets; and thereafter the number of such
shares and/or other securities or assets shall be subject to adjustment from
time to time in a manner and upon terms as nearly equivalent as practicable to
the provisions of this Section 4.
5. FRACTIONAL INTERESTS.
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant, the
holder hereof may purchase only a whole number of shares of Common Stock. The
Company shall make a payment in cash in respect of any fractional shares which
might otherwise be issuable upon Exercise of this Warrant, calculated by
multiplying the fractional share amount by the market price of the Company's
Common Stock on the Date of Exercise as reported by the Nasdaq National Market
or such other exchange as Company's Common Stock is traded on.
6. RESERVATION OF SHARES.
The Company shall at all times reserve for issuance such number of
<PAGE>
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for Exercise of this
Warrant. The Company covenants and agrees that upon Exercise of this Warrant,
all shares of Common Stock issuable upon such Exercise shall be duly and validly
issued, fully paid, nonassessable and not subject to preemptive rights of any
shareholders.
7. RESTRICTIONS ON TRANSFER.
This Warrant and the Common Stock issuable on Exercise hereof have not
been registered under the Securities Act of 1933, as amended, and may not be
sold, transferred, pledged, hypothecated or otherwise disposed of in the absence
of registration or the availability of an exemption from registration under
said Act, and, in the event a holder believes an exemption from the registration
requirements of the Act is available, the holder must deliver a legal opinion
satisfactory in form and substance, to the Issuer and its counsel, stating that
such exemption is available. All shares of Common Stock issued upon Exercise of
this Warrant shall bear an appropriate legend to such effect.
8. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to confer upon any person
other than the Company and the holder of this Warrant any legal or equitable
right, remedy or claim under this Warrant and this Warrant shall be for the sole
and exclusive benefit of the Company and the holder of this Warrant.
9. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be governed by
and construed in accordance with the laws of the state of Delaware.
Jurisdiction for any dispute regarding this Warrant lies in Delaware.
10. LOSS OF WARRANT.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
11. NOTICE TO COMPANY.
Notices or demands pursuant to this Warrant to be given or made by the
holder of this Warrant to or on the Company shall be sufficiently given or made
if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, until another address is designated in writing by the
Company, Attn: President, Cortex Pharmaceuticals, Inc., 15241 Barranca Parkway
Irvine, CA 92718. Notices or demands pursuant to this Warrant to be given or
made by the Company to or on the holder of this Warrant shall be sufficiently
given or made if sent by certified or registered mail, return receipt requested,
postage prepaid, and addressed, until another address is designated in
<PAGE>
writing by the holder, Attn: Mr. Eric Swartz, Swartz Investments, Inc., 1080
Holcomb Bridge Road, 200 Roswell Summit, Suite 285, Roswell, GA 30076 until
another address is designated in writing by Swartz Investments, Inc.
IN WITNESS WHEREOF, this Warrant is hereby executed effective as of the
date set forth below.
Dated as of: December 8, 1995
CORTEX PHARMACEUTICALS, INC.
By: /s/ D. SCOTT HAGEN
------------------------------------
Print Name: D. SCOTT HAGEN
----------------------------
Title: Acting President and CEO
---------------------------------
<PAGE>
SUBSCRIPTION FORM
TO: CORTEX PHARMACEUTICALS, INC.
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of Common Stock of Cortex Pharmaceuticals, Inc., a
Delaware corporation, evidenced by the attached Warrant, and herewith makes
payment of the Exercise Price with respect to such shares in full, all in
accordance with the conditions and provisions of said Warrant.
The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of such Common Stock, except in accordance with the provisions of Section 7
of the Warrant, and consents that the following legend may be affixed to the
certificates for the Common Stock hereby subscribed for, if such legend is
applicable:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or any
state securities law, and may not be sold, transferred, pledged,
hypothecated or otherwise disposed of until either (i) a registration
statement under the Securities Act and applicable state securities laws
shall have become effective with regard thereto, or (ii) the corporation
shall have received an opinion of counsel acceptable to the corporation and
its counsel that an exemption from registration under the Securities Act or
applicable state securities laws is available in connection with such
offer, sale or transfer."
The undersigned requests that certificates for such shares be issued, and a
warrant representing any unexercised portion thereof be issued, pursuant to the
Warrant in the name of the Registered Holder and delivered to the undersigned
at the address set forth below:
Dated:
- --------------------------------------------------------------------------------
Signature of Registered Holder
- --------------------------------------------------------------------------------
Name of Registered Holder (Print)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
The attached Warrant and the securities issuable on exercise thereof have not
been registered under the Securities Act of 1933, as amended, and may not be
sold, transferred, pledged, hypothecated or otherwise disposed of in the absence
of registration or the availability of an exemption from registration under said
Act.
- --------------------------------------------------------------------------------
<PAGE>
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached Warrant hereby
sells, assigns and transfers unto the person or persons below named the right to
purchase ___________ shares of the Common Stock of CORTEX PHARMACEUTICALS, INC.
evidenced by the attached Warrant and does hereby irrevocably constitute and
appoint _______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the premises.
Dated: __________________________________
Signature
Fill in for new Registration of Warrant:
___________________________________
Name
___________________________________
Address
___________________________________
Please print name and address of
assignee (including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to the foregoing Subscription Form or Assignment must correspond
to the name as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
PRESS RELEASE
Contact: Scott Hagen, Vice President and Chief Financial Officer; Acting
President and Chief Operating Officer, (714) 727-3157, or Lucy
Morrison, Feinstein Partners, (617) 577-8110
CORTEX PHARMACEUTICALS RAISES $4 MILLION IN PRIVATE PLACEMENT
Irvine, Calif., December 12, 1995 -- Cortex Pharmaceuticals, Inc. (Nasdaq:CORX)
today announced at its 1995 Annual Meeting of Stockholders that it has raised
approximately $4 million in a private placement of 160 shares of preferred stock
to offshore institutional investors. The preferred stock is convertible,
commencing 45 days after the closing, into common stock at an effective
conversion price of $2.825 per share of common stock, or 85% of the fair market
value of the common stock at the time of conversion, whichever is lower. The
placement was arranged by Swartz Investments, Inc. of Roswell, Georgia.
The proceeds from the offering will be used to fund additional clinical studies
with CX516, or AMPALEX-TM-, Cortex's lead compound currently in early human
clinical testing for the potential treatment of deficits of memory and cognition
due to Alzheimer's disease. The first Phase I study with CX516 was completed in
February 1995, and in September 1995 the Company reported that evaluation of the
psychometric data from this study, which involved healthy young volunteers, had
revealed an apparent positive effect of CX516 on memory performance. Cortex also
plans to begin preclinical toxicology studies on at least one additional
compound from the AMPAKINE-TM- family of AMPA receptor modulating compounds.
Cortex, located in Irvine, California, was established in 1987 to discover and
develop innovative drugs for the treatment of age-related neurological diseases
and disorders. The primary programs at Cortex are directed toward the
development of AMPAKINES-TM- for the treatment of diseases and disorders
associated with depressed functioning of glutamatergic pathways in the brain
and, over the longer term, for slowing or stopping the underlying pathology of
Alzheimer's disease.
# # # # #
