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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: March 4, 1999
(Date of earliest event reported)
AVANIR PHARMACEUTICALS
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or other jurisdiction of incorporation)
0-18734 33-0314804
(Commission File Number) (IRS Employer Identification No.)
9393 Towne Centre Drive, Suite 200, San Diego, California 92121
(Address of principal executive offices) (Zip code)
(619) 558-0364
(Registrants telephone number, including area code)
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Item 5. OTHER EVENTS
The Company recently granted the following two stock purchase warrants
to consultants in exchange for their services:
1. Class I Stock Purchase Warrant. On March 4, 1999, the Company
engaged the services of a consultant to provide advice and
counsel to the Company in preparing various materials for
submission to regulatory approval agencies and in monitoring the
progress of such submissions. The contract for consulting
services is for a period of 18 months. In connection with the
consulting services, the Company issued to the consultant a
Class I Stock Purchase Warrant for the purchase of 500,000
shares of the Company's Class A Common Stock at an exercise
price of $0.78125 per share. The warrant vested fully upon
issuance. The consultant has agreed, however, to render
consulting services during the entire 18-month period as
consideration for receipt of the Warrant and the consultant's
exercise of any unexercised portion of the warrant is subject to
the consultant continuing to render consulting services during
such period. The Class I Stock Purchase Warrant expires on March
3, 2004.
2. Class K Stock Purchase Warrant. On April 1, 1999, the Company
engaged the services of another consultant to provide investor
relations services for a period of one year. In connection with
the consulting services, the company issued a Class K Stock
Purchase Warrant for the purchase of up to 375,000 shares of
Common Stock at an exercise price of $1.125 per share. The
vesting schedule for the warrant requires the consultant to
achieve certain performance milestones during the one-year
consulting period, with the exception of the right to purchase
62,500 shares of Class A Common Stock which vested on April 1,
1999. The Class K Stock Purchase Warrant expires on March 31,
2004.
The above summary is qualified in its entirety by the terms and
provisions of the exhibits attached herein to this Current Report on Form 8-K.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
4.1 Class I Stock Purchase Warrant
4.2 Form of Class K Stock Purchase Warrant
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AVANIR PHARMACEUTICALS
Date: April 20, 1999 By:/s/Gregory P. Hanson
------------------------------------
Gregory P. Hanson
Vice President, Finance and
Chief Financial Officer
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EXHIBIT 4.1
THE TRANSFER OF THIS WARRANT IS SUBJECT TO
RESTRICTIONS CONTAINED HEREIN. THIS WARRANT
HAS BEEN ISSUED IN RELIANCE UPON THE
REPRESENTATION OF HOLDER THAT IT HAS BEEN
ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION
THEREOF. NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
AVANIR PHARMACEUTICALS
AMENDED AND RESTATED CLASS I STOCK PURCHASE WARRANT
To Subscribe for and Purchase MARCH 4, 1999
Shares of Class A Common Stock of
AVANIR Pharmaceuticals
VOID AFTER 5:00 P.M.,
PACIFIC TIME
MARCH 3, 2004
THIS CLASS I STOCK PURCHASE WARRANT CERTIFIES that, for value received,
JMBL LLC, a Delaware limited liability company ("Holder"), is entitled to
subscribe for and purchase from AVANIR Pharmaceuticals, a California corporation
(hereinafter called the "Corporation"), Five Hundred Thousand (500,000) shares
(subject to adjustment as hereinafter provided) of fully paid and non-assessable
Class A Common Stock, no par value per share, of the Corporation ("Common
Stock"), at the price per share equal to $0.78125 per share (such price as from
time to time to be adjusted as hereinafter provided being hereinafter called the
"Warrant Price"), at any time from the date hereof but at or prior to 5:00 p.m.
Pacific time on March 3, 2004 (the "Warrant Term"), subject, however, to the
provisions and upon the terms and conditions hereinafter set forth. This Class I
Stock Purchase Warrant and any warrant or warrants subsequently issued upon
exchange or transfer hereof are hereinafter collectively called this "Warrant."
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Section 1. Exercise of Warrant.
(1) Once vested as set forth in Section 2, Holder may
exercise the rights represented by this Warrant, in whole or in part (but not as
to fractional shares) at any time or from time to time, by Holder's (a)
completion of the purchase form attached hereto, (b) surrender of this Warrant
(properly endorsed) at the office of the Corporation (as it may designate by
notice in writing to Holder at the address of Holder appearing on the books of
the Corporation), and (c) payment to the Corporation of the Warrant Price in
cash (or by certified or official bank check) for each share of Common Stock
being purchased.
(2) Subject to item (3) of this section, Holder may elect to
exercise this Warrant in whole or in part, in lieu of making the cash payment
contemplated above in item (1) of this section, by electing instead to receive
upon such exercise the "Net Number" of shares of Common Stock determined in
accordance with the following formula (a "Cashless Exercise"):
Net Number = (A x B) - (A x C)
-----------------
B
For purposes of the foregoing formula:
A = the total number shares with respect to which this Warrant
is then being exercised;
B = the last reported sale price (as reported in The Wall Street
Journal) of the Common Stock on the date immediately preceding
the date of such exercise; and
C = the Warrant Price then in effect at the time of such
exercise.
(3) Holder shall provide to the Corporation five (5) days'
advance written notice of its intention to effect any Cashless Exercise. In lieu
of such Cashless Exercise, Holder may exercise this Warrant (in whole or in part
as indicated in such notice) by the payment of cash to the Corporation as set
forth above in item (1)(c) of this Section 1; provided, however, that, with
respect to this item (3) only, the Corporation will pay all reasonable broker
fees and commissions incurred by Holder in connection with Holder's sale of a
sufficient number of shares of Common Stock necessary to fund such exercise of
this Warrant.
(4) Corporation will deliver to Holder, within fifteen (15)
calendar days after the date on which the rights represented by this Warrant
will have been so exercised, a certificate or certificates for the shares of
Common Stock so purchased, registered in the name of Holder; and, unless this
Warrant has expired or has been exercised in full, a new warrant representing
the number of shares (except a remaining fractional share) of Common Stock, if
any, with respect to which this Warrant will not then have been exercised will
also be issued to Holder within such time. Upon exercise of this Warrant, Holder
will be deemed for all purposes to have become the holder of record of the
shares of Common Stock resulting from such exercise on the date on which this
Warrant was surrendered and the Corporation received payment of the Warrant
Price for such shares, except that, if the date of such surrender and payment is
a date on which the stock transfer books of the Corporation are closed, Holder
will be deemed to have become the
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holder of such shares at the close of business on the next succeeding date on
which the stock transfer books are open. No fractional shares will be issued
upon exercise of this Warrant and no payment or adjustment will be made upon any
exercise on account of any cash dividends on the Common Stock issued upon such
exercise. If any fractional interest in a share of Common Stock would be
delivered upon such exercise, then the Corporation, in lieu of delivery of a
fractional share thereof, will pay to Holder an amount in cash equal to the
proportional amount of the closing sales price of a share of Common Stock as
reported in The Wall Street Journal on the date immediately preceding the date
of such exercise.
Section 2. Vesting. This Warrant to purchase 500,000 shares of Common
Stock shall vest and become exercisable upon the final execution and delivery of
the Services Agreement, dated as of March 4, 1999 (the "Services Agreement"), by
and between the Corporation and Holder; provided, however, that the Holder's
exercise of this Warrant in whole or in part shall be subject to Holder
continuing to render the Services (as defined in the Services Agreement) during
the entire Service Term (as defined in the Services Agreement).
Section 3. Stock Splits, Consolidation. In the event that, prior to the
issuance of the shares of Common Stock into which this Warrant may be exercised,
the outstanding shares of Common Stock will be split, combined or consolidated,
by dividend, reclassification or otherwise, into a greater or lesser number of
shares of Common Stock, the Warrant Price in effect immediately prior to such
combination or consolidation and the number of shares of Common Stock
purchasable under this Warrant will, concurrently with the effectiveness of such
combination or consolidation, be proportionately adjusted.
Section 4. Shares to Be Reserved. The Corporation will at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issue upon the exercise of this Warrant as herein provided,
such number of shares of Common Stock as will then be issuable upon the exercise
of this Warrant. The Corporation will from time to time in accordance with
applicable law increase the authorized number of shares of Common Stock if at
any time the number of shares of Common Stock remaining unissued and available
for issuance will not be sufficient to permit the exercise of this Warrant. The
Corporation covenants that all shares of Common Stock that will be so issued
will be duly and validly issued and fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof, and, without
limiting the generality of the foregoing, the Corporation will take all such
action as may be necessary to assure that all such shares of Common Stock may be
so issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange or the Nasdaq National Market
or the Nasdaq SmallCap Market upon which shares of Common Stock may be listed.
Section 5. Notices of Record Dates. In the event of
(1) any taking by the Corporation of a record of the holders
of any class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution (other than cash
dividends out of earned surplus), or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
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(2) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation or
any transfer of all or substantially all the assets of the Corporation to or
consolidation or merger of the Corporation with or into any other corporation,
or
(3) any voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation,
then and in each such event the Corporation will give notice to Holder
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right and stating the amount and character of
such dividend, distribution or right, and (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock will be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice will be given at least five (5) days prior to the date
therein specified.
Section 6. No Shareholder Rights or Liabilities. This Warrant will not
entitle Holder to any voting rights or other rights as a shareholder of the
Corporation. No provision hereof, in the absence of affirmative action by Holder
to purchase shares of Common Stock, and no mere enumeration hereon of the rights
or privileges of Holder, will give rise to any liability of Holder for the
Warrant Price or as a shareholder of the Corporation, whether such liability is
asserted by the Corporation or by creditors of the Corporation.
Section 7. Representations of Holder. Holder hereby represents and
acknowledges to the Corporation that:
(1) this Warrant, and the shares of Common Stock issuable
upon exercise of this Warrant, and any securities issued with respect to any of
them by way of a stock dividend or stock split or in connection with a
recapitalization, merger, consolidation or other reorganization will be
"restricted securities" as such term is used in the rules and regulations under
the Securities Act of 1933, as amended (the "Securities Act"), and, subject to
Section 10, such securities have not been and will not be registered under the
Securities Act or any state securities law, and such securities must be held
indefinitely unless registration is effected or transfer can be made pursuant to
appropriate exemptions;
(2) Holder has read, and fully understands, the terms of
this Warrant set forth on its face and the attachments hereto, including the
restrictions on transfer contained herein;
(3) Holder has either a pre-existing personal or business
relationship with the Corporation or one of its officers, directors or
controlling persons;
(4) Holder is acquiring this Warrant and the shares of
Common Stock issuable upon exercise of this Warrant for investment for its own
account and not with a view to or for sale in connection with any distribution
of this Warrant and/or the shares of Common Stock issuable upon exercise of this
Warrant, and Holder has no intention of selling such securities in a public
distribution in violation of the federal securities laws or any applicable state
securities
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laws; provided that nothing contained herein will prevent Holder from
transferring such securities in compliance with the terms of this Warrant and
the applicable federal and state securities laws;
(5) Holder is an "accredited investor" within the meaning of
paragraph (a) of Rule 501 of Regulation D promulgated under the Securities Act
and an "excluded purchaser" within the meaning of Section 25102(f) of the
California Corporate Securities Law of 1968; and
(6) the Corporation may affix the following legend (in
addition to any other legend(s), if any, required by applicable state corporate
and/or securities laws) to certificates for shares of Common Stock issued upon
exercise of this Warrant.
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM."
Section 8. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated or destroyed, the Corporation may, on such terms as
to indemnity or otherwise as it may in its discretion reasonably impose (which
will, in the case of a mutilated warrant, include the surrender thereof), issue
a new warrant of like denomination and tenor as this Warrant as so lost, stolen,
mutilated or destroyed. Any such new warrant will constitute an original
contractual obligation of the Corporation, whether or not the allegedly lost,
stolen, mutilated or destroyed warrant will be at any time enforceable by
anyone.
Section 9. Presentment. Prior to due presentment of this Warrant
together with a completed assignment form attached hereto for registration of
transfer, the Corporation may deem and treat Holder as the absolute owner of
this Warrant, notwithstanding any notation of ownership or other writing
thereon, for the purpose of any exercise thereof and for all other purposes, and
the Corporation will not be affected by any notice to the contrary.
Section 10. Registration Rights.
(1) The Corporation shall use its best efforts to file with
the Securities Exchange Commission (the "SEC") on or before June 2, 1999 a
Registration Statement on Form S-3 covering the continuous sale pursuant to Rule
415 under the Securities Act (the "Shelf Registration Statement"), in the manner
specified therein (provided that such manner shall not include an underwritten
public offering), of the shares of Common Stock underlying this Warrant
(collectively, the "Registration Shares"). The Corporation shall use its best
efforts to cause the Shelf Registration Statement to be declared effective by
the SEC as soon as practicable after its filing with the SEC, and to remain
effective until the earlier of (i) such time as all of the Registration Shares
are sold pursuant to the Shelf Registration Statement or (ii) the conclusion of
the Warrant Term (the "Effective Period"); provided, however, that, in the event
that the
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Corporation determines in good faith that, because it has under consideration a
significant (as defined under Regulation S-X of the SEC rules) acquisition or
disposition or other material transaction that has not been publicly disclosed
or that it is in the process of preparing for filing with the SEC a Current
Report on Form 8-K or other form, the Shelf Registration Statement may contain a
material misstatement or omission, the Corporation may cause the Shelf
Registration Statement to not be used for an aggregate period not to exceed
forty-five (45) days during the Effective Period.
(2) The Corporation shall use its best efforts to cause the
Registration Shares to be approved for quotation on the Nasdaq National Market
System, or other national securities exchange on which the Common Stock is
principally traded, on or before the Shelf Registration Statement is declared
effective by the SEC. The Corporation also will use its best efforts to register
or qualify the Registration Shares under such other securities or blue sky laws
of the United States and keep such registration or qualification in effect for
the Effective Period and do any and all other acts and things which may be
reasonably necessary or advisable to enable the Holder to have the right to sell
or otherwise dispose of the Registration Shares in such jurisdictions.
(3) In connection with the registration of the Registration
Shares pursuant to this Warrant, Holder shall furnish the Corporation with such
information concerning Holder as the Corporation may reasonably request for use
in the preparation of the Shelf Registration Statement or any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto ("Prospectus"), and shall cooperate fully in the
preparation and filing of the Shelf Registration Statement. Holder hereby agrees
to indemnify the Corporation, the Corporation's officers, employees, directors
and agents, and each person, if any, who controls the Corporation within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
and liabilities to which the Corporation or any such officer, employee, director
or agent or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue (or alleged untrue) statement of any material fact
contained in, or any material fact omitted from (or allegedly omitted from) the
Shelf Registration Statement or any Prospectus covering the Registration Shares,
if such statement or omission was made in reliance upon and in conformity with
written information furnished to the Corporation by Holder expressly for use in
the Shelf Registration Statement or any Prospectus covering the Registration
Shares.
(4) The Corporation will, prior to filing the Shelf
Registration Statement, furnish to Holder a copy of the draft of such document
that is proposed to be filed. The Corporation will promptly notify Holder of any
stop order issued or threatened by the SEC with respect to the Shelf
Registration Statement and will take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered. The Corporation will
notify Holder during the effectiveness of the Shelf Registration Statement of
the occurrence of an event that would require the preparation of a supplement or
amendment to the Prospectus in order for the Prospectus to not (i) contain an
untrue statement of a material fact or (ii) omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Corporation will provide Holder with a copy of any such
supplement or
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amendment. Holder shall advise the Corporation of any proposed change in the
manner of distribution.
(5) The Corporation hereby indemnifies and holds harmless
Holder, each of Holder's officers, employees, members, managers and agents and
each person deemed to be an "underwriter" under the Securities Act, if any, and
each person controlling such Stockholder within the meaning of Section 15 of the
Securities Act, if any, against any losses, claims, damages or liabilities to
which Holder or any of the foregoing persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue (or alleged untrue)
statement of any material fact contained in the Shelf Registration Statement or
any Prospectus covering the Registration Shares or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except insofar as such untrue (or alleged
untrue) statement or omission (or alleged omission) shall have been based upon
information furnished to the Corporation by Holder or such other persons, and
the Corporation will reimburse Holder for any legal or other expenses reasonably
incurred by him in connection with investigating or defending any such loss,
claim, damage, liability, action or proceedings. Notwithstanding the foregoing,
in the event that the Corporation is required to indemnify Holder pursuant to
this subsection, the Corporation shall be entitled to assume the defense of such
investigation or defense, with counsel approved by Holder, which approval shall
not be unreasonably withheld, upon the delivery to Holder of written notice of
its election to do so. After delivery of such notice, the Corporation shall not
be liable to Holder under this subsection for any fees of counsel subsequently
incurred by Holder with respect to the same investigation or defense.
(6) In circumstances in which any indemnity provided by the
preceding subsections of this Section 10 is unavailable or insufficient, for any
reason, to hold harmless an indemnified party in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof), then each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) in such proportion as is appropriate to reflect (i) the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand in connection with the statements
or omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
and (ii) any other relevant equitable considerations. The relevant fault of the
parties shall be determined by reference to, among other things, whether the
statement or omission or alleged statement or omission relates to information
supplied by the Corporation or by Holder, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances.
(7) The registration rights set forth in this section with
respect to the Registration Shares are not assignable without the express
written consent of the Corporation.
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Section 11. Notice. Notice or demand pursuant to this Warrant will be
sufficiently given or made, if sent by facsimile and/or first-class mail,
postage prepaid, addressed to:
Holder: JMBL LLC
3221 Volta Place N.W.
Washington, D.C. 20007
and 3828 Kennet Pike, Suite 206
Greenville, Delaware l9807
Attention: Jeffrey M. Busch
Telecopy: (302) 655-1281
Corporation: AVANIR Pharmaceuticals
393 Towne Centre Drive, Suite 200
San Diego, California 92121
Attention: Secretary
Telecopy: (619) 455-8059
Holder or the Corporation may alter its address to which communications are to
be sent by giving notice of such change of address in conformity with the
provisions of this section for the giving of notice.
Section 12. Governing Law. The validity, interpretation and performance
of this Warrant will be governed by the laws of the State of California without
regard to principles of conflicts of laws.
Section 13. Assignment. This Warrant shall not be transferable or
assignable during the entire Service Term (as defined in the Services
Agreement).
Section 14. Severability. Should any part but not the whole of this
Warrant for any reason be declared invalid, such declaration shall not affect
the validity of any remaining portion, which remaining portion will remain in
force and effect as if this Warrant had been executed with the invalid portion
thereof eliminated, and it is hereby declared the intention of the parties
hereto that they would have executed the remaining portion of this Warrant
without including therein any such part which may, for any reason, be hereafter
declared invalid.
Section 15. Counterparts. This Warrant may be executed in two
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly
executed and delivered on and as of the day and year first above written by one
of its officers thereunto duly authorized.
AVANIR PHARMACEUTICALS,
a California corporation
Dated as of: March 4, 1999 By: /s/Gerald J. Yakatan
-------------------------------------
Gerald J. Yakatan
Chief Executive Officer
The undersigned Holder agrees and accepts this Warrant, acknowledges
that it has read and confirms each of the representations contained in Section 7
and shall perform its obligations under Section 10 of this Warrant.
JMBL LLC,
a Delaware limited liability company
Dated as of: March 4, 1999 By: /s/Jeffery M. Busch
-------------------------------------
Jeffrey M. Busch
President
[SIGNATURE PAGE TO AVANIR PHARMACEUTICALS
CLASS I STOCK PURCHASE WARRANT]
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AVANIR PHARMACEUTICALS
CLASS A COMMON STOCK
PURCHASE FORM
[To be executed by Holder if it desires to exercise the Warrant in whole or in
part.]
To: AVANIR PHARMACEUTICALS
The undersigned, whose Social Security or other identifying number is
_____, hereby irrevocably elects the right of purchase represented by the within
Warrant for, and to purchase thereunder, _____ shares of Class A Common Stock,
no par value per share, provided for therein and tenders payment herewith to the
order of AVANIR PHARMACEUTICALS in the amount of $________.
The undersigned requests that certificates for such shares be issued and
delivered as follows:
JMBL LLC
3221 Volta Place N.W.
Washington, D.C. 20007
and, if said number of shares of Class A Common Stock will not be all of the
shares purchasable hereunder, that a new warrant for the balance remaining of
the shares purchasable under the within Warrant be registered in the name of,
and delivered to, the undersigned at the above address.
Dated: JMBL LLC, a Delaware limited liability
company
----------------------------------------
By: Jeffrey M. Busch
Its: President
(Signature must conform in all respects
to the name of the Warrant Holder as
specified on the face of the Warrant,
without alteration, enlargement or any
change whatsoever)
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EXHIBIT 4.2
THE TRANSFER OF THIS WARRANT IS SUBJECT TO
RESTRICTIONS CONTAINED HEREIN. THIS WARRANT
HAS BEEN ISSUED IN RELIANCE UPON THE
REPRESENTATION OF HOLDER THAT IT HAS BEEN
ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH
A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION
THEREOF. NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
AVANIR PHARMACEUTICALS
FORM OF CLASS K STOCK PURCHASE WARRANT
To Subscribe for and Purchase APRIL 1, 1999
Shares of Class A Common Stock of
AVANIR Pharmaceuticals
VOID AFTER 5:00 P.M.,
PACIFIC TIME
MARCH 31, 2004
THIS CLASS K STOCK PURCHASE WARRANT CERTIFIES that, for value received,
Redington, Inc., a Connecticut corporation ("Holder"), is entitled to subscribe
for and purchase from AVANIR Pharmaceuticals, a California corporation
(hereinafter called the "Corporation"), up to Three Hundred Seventy Five
Thousand (375,000) shares (subject to adjustment as hereinafter provided) of
fully paid and non-assessable Class A Common Stock, no par value per share, of
the Corporation ("Common Stock"), at the price per share equal to $1.125 (such
price as from time to time to be adjusted as hereinafter provided being
hereinafter called the "Warrant Price"), at any time from the date hereof but at
or prior to 5:00 p.m. Pacific time on March 31, 2004 (the "Warrant Term"),
subject, however, to the provisions and upon the terms and conditions
hereinafter set forth. This Class K Stock Purchase Warrant and any warrant or
warrants subsequently issued upon exchange or transfer hereof are hereinafter
collectively called this "Warrant."
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Section 1. Exercise of Warrant.
(1) Once vested as set forth in Section 2, Holder may
exercise the rights represented by this Warrant, in whole or in part (but not as
to fractional shares) at any time or from time to time, by Holder's (a)
completion of the purchase form attached hereto, (b) surrender of this Warrant
(properly endorsed) at the office of the Corporation (as it may designate by
notice in writing to Holder at the address of Holder appearing on the books of
the Corporation), and (c) payment to the Corporation of the Warrant Price in
cash (or by certified or official bank check) for each share of Common Stock
being purchased.
(2) Corporation will deliver to Holder, within fifteen (15)
calendar days after the date on which the rights represented by this Warrant
will have been so exercised, a certificate or certificates for the shares of
Common Stock so purchased, registered in the name of Holder; and, unless this
Warrant has expired or has been exercised in full, a new warrant representing
the number of shares (except a remaining fractional share) of Common Stock, if
any, with respect to which this Warrant will not then have been exercised will
also be issued to Holder within such time. Upon exercise of this Warrant, Holder
will be deemed for all purposes to have become the holder of record of the
shares of Common Stock resulting from such exercise on the date on which this
Warrant was surrendered and the Corporation received payment of the Warrant
Price for such shares, except that, if the date of such surrender and payment is
a date on which the stock transfer books of the Corporation are closed, Holder
will be deemed to have become the holder of such shares at the close of business
on the next succeeding date on which the stock transfer books are open. No
fractional shares will be issued upon exercise of this Warrant and no payment or
adjustment will be made upon any exercise on account of any cash dividends on
the Common Stock issued upon such exercise. If any fractional interest in a
share of Common Stock would be delivered upon such exercise, then the
Corporation, in lieu of delivery of a fractional share thereof, will pay to
Holder an amount in cash equal to the proportional amount of the closing sales
price of a share of Common Stock as reported in The Wall Street Journal on the
date immediately preceding the date of such exercise.
Section 2. Vesting. The vesting of the Warrant shall be as follows:
(1) 62,500 shares of Common Stock underlying the Warrant shall vest on April 1,
1999 and (2) the balance of the shares of Common Stock underlying the Warrant
shall vest in five increments of 62,500 on the condition that the Company's
Common Stock attains for ten consecutive trading days the following closing
sales prices: $1.75 per share, $2.00 per share, $2.50 per share, $3.00 per
share and $3.50 per share (in each case, if before April 1, 2000), respectively,
provided, however, that the above-referenced share prices, if not previously
satisfied in whole, shall be increased in the event the Company (i) obtains FDA
marketing approval of docosanol cream and (ii) has commenced marketing of
product within six months of such approval, to $2.00 per share, $2.75 per
share, $3.25 per share, $3.75 per share and $5.00 per share, respectively.
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Section 3. Stock Splits, Consolidation. In the event that, prior to the
issuance of the shares of Common Stock into which this Warrant may be exercised,
the outstanding shares of Common Stock will be split, combined or consolidated,
by dividend, reclassification or otherwise, into a greater or lesser number of
shares of Common Stock, the Warrant Price in effect immediately prior to such
combination or consolidation and the number of shares of Common Stock
purchasable under this Warrant will, concurrently with the effectiveness of such
combination or consolidation, be proportionately adjusted.
Section 4. Shares to Be Reserved. The Corporation will at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issue upon the exercise of this Warrant as herein provided,
such number of shares of Common Stock as will then be issuable upon the exercise
of this Warrant. The Corporation will from time to time in accordance with
applicable law increase the authorized number of shares of Common Stock if at
any time the number of shares of Common Stock remaining unissued and available
for issuance will not be sufficient to permit the exercise of this Warrant. The
Corporation covenants that all shares of Common Stock that will be so issued
will be duly and validly issued and fully paid and nonassessable and free from
all taxes, liens and charges with respect to the issue thereof, and, without
limiting the generality of the foregoing, the Corporation will take all such
action as may be necessary to assure that all such shares of Common Stock may be
so issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange or the Nasdaq National Market
or the Nasdaq SmallCap Market upon which shares of Common Stock may be listed.
Section 5. Notices of Record Dates. In the event of
(1) any taking by the Corporation of a record of the holders
of any class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend or other distribution (other than cash
dividends out of earned surplus), or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(2) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation or
any transfer of all or substantially all the assets of the Corporation to or
consolidation or merger of the Corporation with or into any other corporation,
or
(3) any voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation,
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then and in each such event the Corporation will give notice to Holder
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right and stating the amount and character of
such dividend, distribution or right, and (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock will be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice will be given at least five (5) days prior to the date
therein specified.
Section 6. No Shareholder Rights or Liabilities. This Warrant will not
entitle Holder to any voting rights or other rights as a shareholder of the
Corporation. No provision hereof, in the absence of affirmative action by Holder
to purchase shares of Common Stock, and no mere enumeration hereon of the rights
or privileges of Holder, will give rise to any liability of Holder for the
Warrant Price or as a shareholder of the Corporation, whether such liability is
asserted by the Corporation or by creditors of the Corporation.
Section 7. Representations of Holder. Holder hereby represents and
acknowledges to the Corporation that:
(1) this Warrant, and the shares of Common Stock issuable
upon exercise of this Warrant, and any securities issued with respect to any of
them by way of a stock dividend or stock split or in connection with a
recapitalization, merger, consolidation or other reorganization will be
"restricted securities" as such term is used in the rules and regulations under
the Securities Act of 1933, as amended (the "Securities Act"), and, subject to
Section 10, such securities have not been and will not be registered under the
Securities Act or any state securities law, and such securities must be held
indefinitely unless registration is effected or transfer can be made pursuant to
appropriate exemptions;
(2) Holder has read, and fully understands, the terms of
this Warrant set forth on its face and the attachments hereto, including the
restrictions on transfer contained herein;
(3) Holder has either a pre-existing personal or business
relationship with the Corporation or one of its officers, directors or
controlling persons;
(4) Holder is acquiring this Warrant and the shares of
Common Stock issuable upon exercise of this Warrant for investment for its own
account and not with a view to or for sale in connection with any distribution
of this Warrant and/or the shares of Common Stock issuable upon exercise of this
Warrant, and Holder has no intention of selling such securities in a public
distribution in violation of the federal securities laws or any applicable state
securities laws; provided that nothing contained herein will prevent Holder from
transferring such securities in compliance with the terms of this Warrant and
the applicable federal and state securities laws;
(5) Holder is an "accredited investor" within the meaning of
paragraph (a) of Rule 501 of Regulation D promulgated under the Securities Act
and an "excluded purchaser" within the meaning of Section 25102(f) of the
California Corporate Securities Law of 1968; and
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(6) the Corporation may affix the following legend (in
addition to any other legend(s), if any, required by applicable state corporate
and/or securities laws) to certificates for shares of Common Stock issued upon
exercise of this Warrant.
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM."
Section 8. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated or destroyed, the Corporation may, on such terms as
to indemnity or otherwise as it may in its discretion reasonably impose (which
will, in the case of a mutilated warrant, include the surrender thereof), issue
a new warrant of like denomination and tenor as this Warrant as so lost, stolen,
mutilated or destroyed. Any such new warrant will constitute an original
contractual obligation of the Corporation, whether or not the allegedly lost,
stolen, mutilated or destroyed warrant will be at any time enforceable by
anyone.
Section 9. Presentment. Prior to due presentment of this Warrant
together with a completed assignment form attached hereto for registration of
transfer, the Corporation may deem and treat Holder as the absolute owner of
this Warrant, notwithstanding any notation of ownership or other writing
thereon, for the purpose of any exercise thereof and for all other purposes, and
the Corporation will not be affected by any notice to the contrary.
Section 10. Registration Rights.
(1) The Corporation shall use its best efforts to file with
the Securities Exchange Commission (the "SEC") on or before June 2, 1999 a
Registration Statement on Form S-3 covering the continuous sale pursuant to Rule
415 under the Securities Act (the "Shelf Registration Statement"), in the manner
specified therein (provided that such manner shall not include an underwritten
public offering), of the shares of Common Stock underlying this Warrant
(collectively, the "Registration Shares"). The Corporation shall use its best
efforts to cause the Shelf Registration Statement to be declared effective by
the SEC as soon as practicable after its filing with the SEC, and to remain
effective until the earlier of (i) such time as all of the Registration Shares
are sold pursuant to the Shelf Registration Statement or (ii) the conclusion of
the Warrant Term (the "Effective Period"); provided, however, that, in the event
that the Corporation determines in good faith that, because it has under
consideration a significant (as defined under Regulation S-X of the SEC rules)
acquisition or disposition or other material transaction that has not been
publicly disclosed or that it is in the process of preparing for filing with the
SEC a Current Report on Form 8-K or other form, the Shelf Registration Statement
may contain a material misstatement or omission, the Corporation may cause the
Shelf Registration Statement to not be used for an aggregate period not to
exceed forty-five (45) days during the Effective Period.
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<PAGE> 6
(2) The Corporation shall use its best efforts to cause the
Registration Shares to be approved for quotation on the Nasdaq National Market
System, or other national securities exchange on which the Common Stock is
principally traded, on or before the Shelf Registration Statement is declared
effective by the SEC. The Corporation also will use its best efforts to register
or qualify the Registration Shares under such other securities or blue sky laws
of the United States and keep such registration or qualification in effect for
the Effective Period and do any and all other acts and things which may be
reasonably necessary or advisable to enable the Holder to have the right to sell
or otherwise dispose of the Registration Shares in such jurisdictions.
(3) In connection with the registration of the Registration
Shares pursuant to this Warrant, Holder shall furnish the Corporation with such
information concerning Holder as the Corporation may reasonably request for use
in the preparation of the Shelf Registration Statement or any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto ("Prospectus"), and shall cooperate fully in the
preparation and filing of the Shelf Registration Statement. Holder hereby agrees
to indemnify the Corporation, the Corporation's officers, employees, directors
and agents, and each person, if any, who controls the Corporation within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
and liabilities to which the Corporation or any such officer, employee, director
or agent or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue (or alleged untrue) statement of any material fact
contained in, or any material fact omitted from (or allegedly omitted from) the
Shelf Registration Statement or any Prospectus covering the Registration Shares,
if such statement or omission was made in reliance upon and in conformity with
written information furnished to the Corporation by Holder expressly for use in
the Shelf Registration Statement or any Prospectus covering the Registration
Shares.
(4) The Corporation will, prior to filing the Shelf
Registration Statement, furnish to Holder a copy of the draft of such document
that is proposed to be filed. The Corporation will promptly notify Holder of any
stop order issued or threatened by the SEC with respect to the Shelf
Registration Statement and will take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered. The Corporation will
notify Holder during the effectiveness of the Shelf Registration Statement of
the occurrence of an event that would require the preparation of a supplement or
amendment to the Prospectus in order for the Prospectus to not (i) contain an
untrue statement of a material fact or (ii) omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Corporation will provide Holder with a copy of any such
supplement or amendment. Holder shall advise the Corporation of any proposed
change in the manner of distribution.
(5) The Corporation hereby indemnifies and holds harmless
Holder, each of Holder's officers, employees, members, managers and agents and
each person deemed to be an "underwriter" under the Securities Act, if any, and
each person controlling such Stockholder within the meaning of Section 15 of the
Securities Act, if any, against any losses, claims, damages or liabilities to
which Holder or any of the foregoing persons may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or
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actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue (or alleged untrue) statement of any
material fact contained in the Shelf Registration Statement or any Prospectus
covering the Registration Shares or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such untrue (or alleged untrue) statement or
omission (or alleged omission) shall have been based upon information furnished
to the Corporation by Holder or such other persons, and the Corporation will
reimburse Holder for any legal or other expenses reasonably incurred by him in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceedings. Notwithstanding the foregoing, in the event
that the Corporation is required to indemnify Holder pursuant to this
subsection, the Corporation shall be entitled to assume the defense of such
investigation or defense, with counsel approved by Holder, which approval shall
not be unreasonably withheld, upon the delivery to Holder of written notice of
its election to do so. After delivery of such notice, the Corporation shall not
be liable to Holder under this subsection for any fees of counsel subsequently
incurred by Holder with respect to the same investigation or defense.
(6) In circumstances in which any indemnity provided by the
preceding subsections of this Section 10 is unavailable or insufficient, for any
reason, to hold harmless an indemnified party in respect of any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof), then each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions or proceedings
in respect thereof) in such proportion as is appropriate to reflect (i) the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand in connection with the statements
or omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
and (ii) any other relevant equitable considerations. The relevant fault of the
parties shall be determined by reference to, among other things, whether the
statement or omission or alleged statement or omission relates to information
supplied by the Corporation or by Holder, the parties' relative intents,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in the
circumstances.
(7) The registration rights set forth in this section with
respect to the Registration Shares are not assignable without the express
written consent of the Corporation.
Section 11. Notice. Notice or demand pursuant to this Warrant will be
sufficiently given or made, if sent by facsimile and/or first-class mail,
postage prepaid, addressed to:
Holder: Redington, Inc.
49 Richmondville
Westport, Connecticut 06880
Attention: Mr. Thomas Redington
Telecopy: (203) 222-1819
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Corporation: AVANIR Pharmaceuticals
393 Towne Centre Drive, Suite 200
San Diego, California 92121
Attention: Secretary
Telecopy: (619) 455-8059
Holder or the Corporation may alter its address to which communications are to
be sent by giving notice of such change of address in conformity with the
provisions of this section for the giving of notice.
Section 12. Governing Law. The validity, interpretation and performance
of this Warrant will be governed by the laws of the State of California without
regard to principles of conflicts of laws.
Section 13. Assignment. This Warrant shall not be transferable or
assignable during the entire Service Term (as defined in the Services
Agreement).
Section 14. Severability. Should any part but not the whole of this
Warrant for any reason be declared invalid, such declaration shall not affect
the validity of any remaining portion, which remaining portion will remain in
force and effect as if this Warrant had been executed with the invalid portion
thereof eliminated, and it is hereby declared the intention of the parties
hereto that they would have executed the remaining portion of this Warrant
without including therein any such part which may, for any reason, be hereafter
declared invalid.
Section 15. Counterparts. This Warrant may be executed in two
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same warrant.
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IN WITNESS WHEREOF, the Corporation has caused this Warrant to be duly
executed and delivered on and as of the day and year first above written by one
of its officers thereunto duly authorized.
AVANIR PHARMACEUTICALS,
a California corporation
Dated as of: By:
-------------------------------------
Gerald J. Yakatan
Chief Executive Officer
The undersigned Holder agrees and accepts this Warrant, acknowledges
that it has read and confirms each of the representations contained in Section 7
and shall perform its obligations under Section 10 of this Warrant.
REDINGTON, INC.
A Connecticut corporation
Dated as of: By:
-------------------------------------
Thomas Redington
President
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AVANIR PHARMACEUTICALS
CLASS A COMMON STOCK
PURCHASE FORM
[To be executed by Holder if it desires to exercise the Warrant in whole or in
part.]
To: AVANIR PHARMACEUTICALS
The undersigned, whose Social Security or other identifying number is
_____, hereby irrevocably elects the right of purchase represented by the within
Warrant for, and to purchase thereunder, _____ shares of Class A Common Stock,
no par value per share, provided for therein and tenders payment herewith to the
order of AVANIR PHARMACEUTICALS in the amount of $________.
The undersigned requests that certificates for such shares be issued and
delivered as follows:
Redington, Inc.
49 Richmondville
Westport, CT 06880
and, if said number of shares of Class A Common Stock will not be all of the
shares purchasable hereunder, that a new warrant for the balance remaining of
the shares purchasable under the within Warrant be registered in the name of,
and delivered to, the undersigned at the above address.
Dated: Redington, Inc., a Connecticut corporation
------------------------------------------
By: Thomas Redington
Its: President
(Signature must conform in all respects
to the name of the Warrant Holder as
specified on the face of the Warrant,
without alteration, enlargement or any
change whatsoever)
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