Warrant to Purchase Common Stock – Transgenomic Inc.
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER
AGENT.
TRANSGENOMIC, INC.
WARRANT TO PURCHASE COMMON STOCK
Original Issue Date: February 7, 2012
Transgenomic, Inc., a Delaware corporation (the “Company“), hereby
certifies that, for value received, or its permitted registered assigns (the
“Holder“), is entitled to purchase from the Company up to a total of
__________ shares of common stock, $0.01 par value per share (the “Common
Stock“), of the Company (each such share, a “Warrant Share” and
all such shares, the “Warrant Shares“) at an exercise price per share
equal to $1.25 per share (as adjusted from time to time as provided in Section 9
herein, the “Exercise Price“), at any time and from time to time on or
after the date hereof (the “Original Exercise Date“) and through and
including 5:30 p.m., New York City time, February 7, 2017 (the “Expiration
Date“), and subject to the following terms and conditions:
This Warrant (this “Warrant“) is one of a series of similar warrants
issued upon conversion of the Convertible Promissory Notes originally issued by
the Company pursuant to that certain Convertible Promissory Note Purchase
Agreement, dated December 30, 2011, by and among the Company, Third Security
Senior Staff 2008 LLC, Third Security Staff 2010 LLC and Third Security
Incentive 2010 LLC (the “Purchase Agreement“). All such warrants are
referred to herein, collectively, as the “Warrants.”
1. Definitions. In addition to the terms defined elsewhere in this
Warrant, capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Purchase Agreement.
2. Registration of Warrants. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose, which may be a
third-party transfer agent (the “Warrant Register“), in the name of the
record Holder (which shall include the initial Holder or, as the case may be,
any registered assignee to which this Warrant is permissibly assigned hereunder)
from time to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or
any distribution to the Holder, and for all other purposes, absent actual notice
to the contrary.
3. Registration of Transfers. The Company shall register the transfer
of all or any portion of this Warrant in the Warrant Register, upon surrender of
this Warrant, with the Form of Assignment attached as Schedule 2 hereto
duly completed and signed, to the Company153s transfer agent or to the Company at
its address specified in the Third Security Purchase Agreement and (x) delivery,
at the request of the Company, of an opinion of counsel reasonably satisfactory
to the Company to the effect that the transfer of such portion of this Warrant
may be made pursuant to an available exemption from the registration
requirements of the Securities Act and all applicable state securities or blue
sky laws (other than in connection with any transfer (i) pursuant to an
effective registration statement, (ii) to the Company, (iii) pursuant to Rule
144 (provided that such Holder provides the Company with reasonable assurances
(in the form of seller and, if applicable, broker representation letters) that
the securities may be sold pursuant to such rule) or (iv) in connection with a
bona fide pledge) and (y) delivery by the transferee of a written statement to
the Company certifying that the transferee is an “accredited investor” as
defined in Rule 501(a) under the Securities Act, at its address specified in the
Third Security Purchase Agreement. Upon any such registration or transfer, a new
warrant to purchase Common Stock in substantially the form of this Warrant (any
such new warrant, a “New Warrant“) evidencing the portion of this
Warrant so transferred shall be issued to the transferee, and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by
the transferee thereof shall be deemed the acceptance by such transferee of all
of the rights and obligations in respect of the New Warrant that the Holder has
in respect of this Warrant. The Company shall prepare, issue and deliver at its
own expense any New Warrant under this Section 3.
4. Exercise and Duration of Warrant.
(a) All or any part of this Warrant shall be exercisable by the registered
Holder in any manner permitted by Section 10 of this Warrant at any time and
from time to time on or after the Original Issue Date and through and including
5:30 p.m. New York City time, on the Expiration Date. At 5:30 p.m., New York
City time, on the Expiration Date, the portion (or all) of this Warrant not
exercised prior thereto shall be and become void and of no value and this
Warrant shall be automatically terminated and no longer outstanding.
(b) The Holder may exercise this Warrant by delivering to the Company (i) an
exercise notice, in the form attached as Schedule 1 hereto (the
“Exercise Notice“), completed and duly signed, and (ii) payment of the
Exercise Price for the number of Warrant Shares as to which this Warrant is
being exercised (which may take the form of a “cashless exercise” if so
indicated in the Exercise Notice and if a “cashless exercise” may occur at such
time pursuant to Section 10 below) within two (2) Business Days following the
Exercise Date (as defined herein). The date on which the Exercise Notice is
delivered to the Company (as determined in accordance with the notice provisions
hereof) is an “Exercise Date.” The Holder shall not be required to
deliver the original Warrant in order to effect an exercise hereunder, but if it
is not so delivered then such exercise shall constitute an agreement by the
Holder to deliver the original Warrant to the Company as soon as practicable
thereafter. Execution and delivery of the Exercise Notice shall have the same
effect as cancellation of the original Warrant and issuance of a New Warrant
evidencing the right to purchase the remaining number of Warrant Shares.
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5. Delivery of Warrant Shares.
(a) Upon exercise of this Warrant, the Company shall promptly (but in no
event later than three Trading Days after the Exercise Date) issue or cause to
be issued and cause to be delivered to or upon the written order of the Holder
and in such name or names as the Holder may designate (provided that, if the
Registration Statement (as defined below) is not effective and the Holder
directs the Company to deliver a certificate for the Warrant Shares in a name
other than that of the Holder or an Affiliate of the Holder, it shall deliver to
the Company on the Exercise Date an opinion of counsel reasonably satisfactory
to the Company to the effect that the issuance of such Warrant Shares in such
other name may be made pursuant to an available exemption from the registration
requirements of the Securities Act and all applicable state securities or blue
sky laws), (i) a certificate for the Warrant Shares issuable upon such exercise,
free of restrictive legends, or (ii) an electronic delivery of the Warrant
Shares to the Holder153s account at the Depository Trust Company (“DTC“)
or a similar organization, unless in the case of clause (i) and (ii) a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder (the “Registration
Statement“) is not then effective or the Warrant Shares are not freely
transferable without restriction under Rule 144 by Holders who are not
affiliates of the Company, in which case such Holder shall receive a certificate
for the Warrant Shares issuable upon such exercise with appropriate restrictive
legends. The Holder, or any Person permissibly so designated by the Holder to
receive Warrant Shares, shall be deemed to have become the holder of record of
such Warrant Shares as of the Exercise Date. Notwithstanding anything contained
herein to the contrary, if the Holder fails to deliver the documents required to
register a transferee as set forth in Section 3 above or to provide the
documents required under this Section 5(a) to issue a certificate or electronic
delivery of the Warrant Shares to any Person(s) other than the Holder, then
determination of the three Trading Days shall be tolled until such documents
have been delivered to the Company. If the Warrant Shares are to be issued free
of all restrictive legends, the Company shall, upon the written request of the
Holder, use its reasonable best efforts to deliver, or cause to be delivered,
Warrant Shares hereunder electronically through DTC or another established
clearing corporation performing similar functions, if available; provided, that,
the Company may, but will not be required to, change its transfer agent if its
current transfer agent cannot deliver Warrant Shares electronically through such
a clearing corporation. “Trading Day” means any day on which the Common
Stock are traded on the principal securities exchange or securities market on
which the Common Stock are then traded (the “Trading Market“);
provided that “Trading Day” shall not include any day on which
the Common Stock is scheduled to trade on such exchange or market for less than
4.5 hours or any day that the Common Stock is suspended from trading during the
final hour of trading on such exchange or market (or if such exchange or market
does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time).
(b) If by the close of the third Trading Day after delivery of a properly
completed Exercise Notice and the payment of the aggregate Exercise Price in any
manner permitted by Section 10 of this Warrant, the Company fails to deliver to
the Holder a certificate representing the required number of Warrant Shares in
the manner required pursuant to Section 5(a), and if after such third Trading
Day and prior to the receipt of such Warrant Shares, the Holder is required to
purchase (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a “Buy-In“), then the
Company shall, in its sole discretion, within three Trading Days after the
Holder153s request for payment, either (1) pay in cash to the Holder an amount
equal to the Holder153s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased, at which point the number of
Warrant Shares underlying this Warrant equal to the number of shares of Common
Stock so purchased shall be forfeited and the Company153s obligation to deliver
such certificate (and to issue such Warrant Shares) shall terminate or (2)
promptly honor its obligation to deliver to the Holder a certificate or
certificates representing such Warrant Shares and pay cash to the Holder in an
amount equal to the excess (if any) of Holder153s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased in
the Buy-In over the product of (A) the number of shares of Common Stock
purchased in the Buy-In, multiplied by (B) the closing bid price of a share of
Common Stock on the Exercise Date. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In,
together with applicable confirmations and other evidence reasonably requested
by the Company.
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(c) To the extent permitted by law, the Company153s obligations to issue and
deliver Warrant Shares in accordance with and subject to the terms hereof are
absolute and unconditional, irrespective of any action or inaction by the Holder
to enforce the same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to enforce the
same, or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company (other than breaches related to this Warrant or the Purchase
Agreement) or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance that might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Warrant Shares. Nothing herein shall limit the Holder153s right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company153s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
6. Charges, Taxes and Expenses. Issuance and delivery of certificates
for shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company; provided,
however, that the Company shall not be required to pay any tax that may be
payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or the Warrants in a name other than that of the
Holder or an Affiliate thereof. The Holder shall be responsible for all other
tax liability that may arise as a result of holding or transferring this Warrant
or receiving Warrant Shares upon exercise hereof.
7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction (in such case)
and, in each case, a customary and reasonable indemnity and surety bond, if
requested by the Company. Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable regulations and procedures and pay
such other reasonable third-party costs as the Company may prescribe. If a New
Warrant is requested as a result of a mutilation of this Warrant, then the
Holder shall deliver such mutilated Warrant to the Company as a condition
precedent to the Company153s obligation to issue the New Warrant.
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8. Reservation of Warrant Shares. The Company represents and warrants
that on the date hereof, it has duly authorized and reserved, and covenants that
it will at all times during the period this Warrant is outstanding reserve and
keep available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares that are initially issuable and deliverable upon the exercise of this
entire Warrant, free from preemptive rights or any other contingent purchase
rights of persons other than the Holder (taking into account the adjustments and
restrictions of Section 9). The Company covenants that all Warrant Shares so
issuable and deliverable shall, upon issuance and the payment of the applicable
Exercise Price in accordance with the terms hereof, be duly and validly
authorized, issued and fully paid and nonassessable and free from all taxes,
liens and charges created by the Company in respect of the original issuance
thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue). The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant. The Company represents and warrants that the Warrant Shares,
when issued and paid for in accordance with the terms of the Transaction
Documents and the Warrants, will be issued free and clear of all security
interests, claims, liens and other encumbrances other than restrictions imposed
by applicable securities laws. The Company will take all such action as may be
reasonably necessary to assure that such shares of Common Stock may be issued as
provided herein without violation of any applicable law or regulation, or of any
requirements of any securities exchange or automated quotation system upon which
the Common Stock may be listed.
9. Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 9.
(a) Stock Dividends and Splits. If the Company, at any time while this
Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides its outstanding shares of Common Stock
into a larger number of shares, (iii) combines (by combination, reverse stock
split or otherwise) its outstanding shares of Common Stock into a smaller number
of shares (a “Stock Combination Event“) or (iv) issues by
reclassification of shares of Common Stock any shares of capital stock of the
Company, then in each such case the Exercise Price shall be adjusted to a price
determined by multiplying the Exercise Price in effect immediately prior to the
effective date of such event by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such effective date immediately
before giving effect to such event and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after giving effect to
such event. Any adjustment made pursuant to clause (i) of this paragraph shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii), (iii) or (iv) of this paragraph shall become
effective immediately after the effective date of such subdivision, combination
or reclassification. If at any time and from time to time on or after the
Issuance Date there occurs a Stock Combination Event and the product of (i) the
quotient determined by dividing (A) the Exercise Price in effect immediately
prior to the Stock Combination Event by (B) the arithmetic average of the
weighted average price during the fifteen (15) Trading Days immediately prior to
the Stock Combination Event; and (ii) the arithmetic average of the weighted
average price during the fifteen (15) Trading Days immediately following the
date of such Stock Combination Event (each, an “Event Market Price”) is less
than the Exercise Price then in effect (after giving effect to the adjustment in
Section 9(a) above), then on the sixteenth (16th) Trading Day immediately
following such Stock Combination Event, the Exercise Price then in effect on
such sixteenth (16th) Trading Day (after giving effect to the adjustment in
Section 9(a) above) shall be reduced (but in no event increased) to the Event
Market Price. For the avoidance of doubt, if the adjustment in the immediately
preceding sentence would otherwise result in an increase in the Exercise Price
hereunder, no adjustment shall be made.
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(b) Pro Rata Distributions. If the Company, at any time while this
Warrant is outstanding, distributes to all holders of Common Stock for no
consideration (i) evidences of its indebtedness, (ii) any security (other than a
distribution of Common Stock covered by the preceding paragraph) or (iii) rights
or warrants to subscribe for or purchase any security, or (iv) any other asset,
including cash (in each case, “Distributed Property“), except, in the
case of subsections (b)(i) through (b)(iv) hereof, for any distributions
pursuant to a shareholders153 rights plan or similar takeover defense agreement or
plan adopted by the Company, then, upon any exercise of this Warrant that occurs
after the record date fixed for determination of stockholders entitled to
receive such distribution, the Holder shall be entitled to receive, in addition
to the Warrant Shares otherwise issuable upon such exercise (if applicable), the
Distributed Property that such Holder would have been entitled to receive in
respect of such number of Warrant Shares had the Holder been the record holder
of such Warrant Shares immediately prior to such record date.
(c) Fundamental Transactions. If, at any time while this Warrant is
outstanding (i) the Company effects (A) any merger of the Company with (but not
into) another Person, in which stockholders of the Company immediately prior to
such transaction own less than a majority of the outstanding stock of the
surviving entity, or (B) any merger or consolidation of the Company into another
Person, (ii) the Company effects any sale of all or substantially all of its
assets in one or a series of related transactions, (iii) any tender offer or
exchange offer approved or authorized by the Company153s Board of Directors is
completed pursuant to which holders of at least a majority of the outstanding
Common Stock tender or exchange their shares for other securities, cash or
property, or (iv) the Company effects any reclassification of the Common Stock
or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property
(other than as a result of a subdivision or combination of shares of Common
Stock covered by Section 9(a) above) (in any such case, a “Fundamental
Transaction“), then the Holder shall have the right thereafter to receive,
upon exercise of this Warrant, the same amount and kind of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of the number of Warrant Shares then issuable upon
exercise in full of this Warrant without regard to any limitations on exercise
contained herein (the “Alternate Consideration“), and the Holder shall
no longer have the right to receive Warrant Shares upon exercise of this
Warrant. The Company shall not effect any such Fundamental Transaction unless
prior to or simultaneously with the consummation thereof, any successor to the
Company, surviving entity or the corporation purchasing or otherwise acquiring
such assets or other appropriate corporation or Person shall assume the
obligation to deliver to the Holder, such Alternate Consideration as, in
accordance with the foregoing provisions, the Holder may be entitled to receive,
and the other obligations under this Warrant. The provisions of this paragraph
(c) shall similarly apply to subsequent transactions of an analogous type to any
Fundamental Transaction.
(d) Number of Warrant Shares. Simultaneously with any adjustment to
the Exercise Price pursuant to paragraph (a) or (e) of this Section 9, the
number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the increased or decreased
number of Warrant Shares shall be the same as the aggregate Exercise Price in
effect immediately prior to such adjustment.
(e) Subsequent Equity Sales.
(i) Except as provided in paragraph (e)(iii) of this Section 9, if and
whenever the Company shall issue or sell, or is, in accordance with any of
paragraphs (e)(ii)(l) through (e)(ii)(7) of this Section 9, deemed to
have issued or sold, any shares of Common Stock for no consideration or for a
consideration per share less than the Exercise Price in effect immediately prior
to the time of such issue or sale, then and in each such case (a “Trigger
Issuance“) the then-existing Exercise Price shall be reduced as of the
close of business on the effective date of the Trigger Issuance, to a price
determined as follows:
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Adjusted Exercise Price = (A x B) + D
A+C
where
“A” equals the number of shares of Common Stock outstanding, including
Additional Shares of Common Stock (as defined below) deemed to be issued
hereunder, immediately preceding such Trigger Issuance;
“B” equals the Exercise Price in effect immediately preceding such Trigger
Issuance;
“C” equals the number of Additional Shares of Common Stock issued or deemed
issued hereunder as a result of the Trigger Issuance; and
“D” equals the aggregate consideration, if any, received or deemed to be
received by the Company upon such Trigger Issuance;
provided, however, that in no event shall the Exercise Price after
giving effect to such Trigger Issuance be greater than the Exercise Price
immediately prior to such Trigger Issuance.
For purposes of this paragraph (e), “Additional Shares of Common
Stock” shall mean all shares of Common Stock issued by the Company or
deemed to be issued pursuant to this paragraph (e), other than Excluded
Issuances (as defined in paragraph (e)(iii) of this Section 9).
(ii) For purposes of this paragraph (e), the following paragraphs (e)(ii)(l)
to (e)(ii)(7) shall also be applicable:
(1) Issuance of Rights or Options. In case at any time the Company
shall in any manner grant (directly and not by assumption in a merger or
otherwise) any warrants or other rights to subscribe for or to purchase, or any
options for the purchase of, Common Stock or any stock or security convertible
into or exchangeable for Common Stock (such warrants, rights or options being
called “Options” and such convertible or exchangeable stock or
securities being called “Convertible Securities“), whether or not such
Options or the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon the conversion or exchange of
such Convertible Securities (determined by dividing (i) the sum (which sum shall
constitute the applicable consideration) of (x) the total amount, if any,
received or receivable by the Company as consideration for the granting of such
Options, plus (y) the aggregate amount of additional consideration payable to
the Company upon the exercise of all such Options, plus (z), in the case of such
Options that relate to Convertible Securities, the aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options) shall be less than the
Exercise Price in effect immediately prior to the time of the granting of such
Options, then the total number of shares of Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of the total amount of
such Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such price per share as of the date of granting
of such Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding for purposes of adjusting the Exercise Price.
Except as otherwise provided in paragraph (e)(ii)(3), no adjustment of the
Exercise Price shall be made upon the actual issue of such Common Stock or of
such Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities.
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(2) Issuance of Convertible Securities. In case the Company shall in
any manner issue (directly and not by assumption in a merger or otherwise) or
sell any Convertible Securities, whether or not the rights to exchange or
convert any such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the sum (which sum shall constitute the
applicable consideration) of (x) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible Securities,
plus (y) the aggregate amount of additional consideration, if any, payable to
the Company upon the conversion or exchange thereof, by (ii) the total number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Exercise Price in effect
immediately prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued for such price
per share as of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding for purposes of adjusting the
Exercise Price, provided that (a) except as otherwise provided in paragraph
(e)(ii)(3), no adjustment of the Exercise Price shall be made upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities and (b) no further adjustment of the Exercise Price shall be made by
reason of the issue or sale of Convertible Securities upon exercise of any
Options to purchase any such Convertible Securities for which adjustments of the
Exercise Price have been made pursuant to the other provisions of paragraph
(e). No adjustment pursuant to this Section 9 shall be made if such
adjustment would result in an increase of the Exercise Price then in
effect.
(3) Change in Option Price or Conversion Rate. Upon the happening of
any of the following events, namely, if the purchase price provided for in any
Option referred to in paragraph (e)(ii)(l) of this Section 9, the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraphs (e)(ii)(l) or (e)(ii)(2), or
the rate at which Convertible Securities referred to in paragraphs (e)(ii)(l) or
(e)(ii)(2) are convertible into or exchangeable for Common Stock shall change at
any time (including, but not limited to, changes under or by reason of
provisions designed to protect against dilution), the Exercise Price in effect
at the time of such event shall forthwith be readjusted to the Exercise Price
that would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold.
(4) Stock Dividends. Subject to the provisions of this paragraph (e),
in case the Company shall declare a dividend or make any other distribution upon
any stock of the Company (other than the Common Stock) payable in Common Stock,
Options or Convertible Securities, then any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.
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(5) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the gross amount received
by the Company therefor. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the Company
shall be deemed to be the fair value of such consideration as determined in good
faith by the Board of Directors of the Company. In case any Options shall be
issued in connection with the issue and sale of other securities of the Company,
together comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for such consideration as determined in good faith by
the Board of Directors of the Company. If Common Stock, Options or Convertible
Securities shall be issued or sold by the Company and, in connection therewith,
other Options or Convertible Securities (the “Additional Rights“) are
issued, then the consideration received or deemed to be received by the Company
shall be reduced by the fair market value of the Additional Rights (as
determined using the Black Scholes Option Pricing Model or another method
mutually agreed to by the Company and the Holder). The Board of Directors of the
Company shall respond promptly, in writing, to an inquiry by the Holder as to
the fair market value of the Additional Rights. In the event that the Board of
Directors of the Company and the Holder are unable to agree upon the fair market
value of the Additional Rights, the Company and the Holder shall jointly select
an appraiser who is experienced in such matters. The decision of such appraiser
shall be final and conclusive, and the cost of such appraiser shall be borne
evenly by the Company and the Holder.
(6) Record Date. In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Options or Convertible
Securities or (ii) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(7) Treasury Shares. The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Company or any of its wholly-owned subsidiaries, and the disposition of
any such shares (other than the cancellation or retirement thereof) shall be
considered an issue or sale of Common Stock for the purpose of this paragraph
(e).
(iii) Notwithstanding the foregoing, no adjustment will be made under this
paragraph (e) in respect of: (i) the issuance of securities upon the exercise or
conversion of any Common Stock or Common Stock Equivalents issued by the Company
prior to the date hereof provided that such securities have not been amended
since the date hereof to increase the number of such securities or to decrease
the exercise price, exchange price or conversion price of such securities, (ii)
the grant of options, warrants, Common Stock or other Common Stock Equivalents
(but not including any amendments to such instruments) under any duly authorized
Company stock option, restricted stock plan or stock purchase plan whether now
existing or hereafter approved by the Company and its stockholders in the
future, and the issuance of Common Stock in respect thereof, (iii) the issuance
of securities in connection with a Strategic Transaction, or (iv) the issuance
of securities in a transaction described in paragraph (a) or (b) of this
Section 9 (collectively, “Excluded Issuances“). For purposes of
this paragraph, a “Strategic Transaction” means a transaction or
relationship in which (1) the Company issues shares of Common Stock to a Person
that the Board of Directors of the Company determined in good faith is, itself
or through its Subsidiaries, an operating company in a business synergistic with
the business of the Company (or a shareholder thereof) and (2) the Company
expects to receive benefits in addition to the investment of funds, but shall
not include (x) a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to a Person whose primary
business is investing in securities or (y) issuances to lenders. The term
“Common Stock Equivalents” shall mean any securities of the Company
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock.
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9 |
(f) Calculations. All calculations under this Section 9 shall be made
to the nearest cent or the nearest share, as applicable. The number of shares of
Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company.
(g) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will, at the written
request of the Holder, promptly compute such adjustment, in good faith, in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment, including a statement of the adjusted Exercise Price and
adjusted number or type of Warrant Shares or other securities issuable upon
exercise of this Warrant (as applicable), describing the transactions giving
rise to such adjustments and showing in reasonable detail the facts upon which
such adjustment is based. Upon written request, the Company will promptly
deliver a copy of each such certificate to the Holder and to the Company153s
transfer agent.
(h) Notice of Corporate Events. If, while this Warrant is outstanding,
the Company (i) declares a dividend or any other distribution of cash,
securities or other property in respect of its Common Stock, including, without
limitation, any granting of rights or warrants to subscribe for or purchase any
capital stock of the Company, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then, except if such notice and the
contents thereof shall be deemed to constitute material non-public information,
the Company shall deliver to the Holder a notice of such transaction at least
ten (10) business days prior to the applicable record or effective date on which
a Person would need to hold Common Stock in order to participate in or vote with
respect to such transaction; provided, however, that the failure to
deliver such notice or any defect therein shall not affect the validity of the
corporate action required to be described in such notice.
10. Payment of Exercise Price. The Holder shall pay the Exercise Price
in immediately available funds; provided, however, that if, on any
Exercise Date there is not an effective Registration Statement registering, or
no current prospectus available for, the resale of the Warrant Shares by the
Holder, then the Holder may, in its sole discretion, satisfy its obligation to
pay the Exercise Price through a “cashless exercise”, in which event the Company
shall issue to the Holder the number of Warrant Shares determined as follows:
X = Y [(A-B)/A]
where:
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10 |
X = the number of Warrant Shares to be issued to the Holder.
Y = the total number of Warrant Shares with respect to which this Warrant is
being exercised.
A = the average of the Closing Bid Price of the shares of Common Stock (as
reported by Bloomberg Financial Markets) for the five consecutive Trading Days
ending on the date immediately preceding the Exercise Date.
B = the Exercise Price then in effect for the applicable Warrant Shares at
the time of such exercise.
For purposes of this Warrant, “Closing Bid Price” means, for any
security as of any date, the last reported closing bid price for such security
on the Trading Market for such security, as reported by Bloomberg Financial
Markets, or, if such Trading Market begins to operate on an extended hours basis
and does not designate the closing bid price, then the last bid price of such
security prior to 4:00 p.m., New York City time, as reported by Bloomberg
Financial Markets, or if the foregoing do not apply, the last closing price of
such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg Financial Markets, or, if no closing
bid price is reported for such security by Bloomberg Financial Markets, the
average of the bid prices of any market makers for such security as reported in
the “pink sheets” by Pink Sheets LLC. If the Closing Bid Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Bid Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and
the Holder are unable to agree upon the fair market value of such security, then
the Board of Directors of the Company shall use its good faith judgment to
determine the fair market value. The Board of Directors153 determination shall be
binding upon all parties absent demonstrable error. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation
period.
For purposes of Rule 144, it is intended, understood and acknowledged that
the provisions above permitting “cashless exercise” are intended, in part, to
ensure that a full or partial exchange of this Warrant pursuant to such
provisions will qualify as a conversion, within the meaning of paragraph
(d)(3)(ii) of Rule 144, and the holding period for the Warrant Shares shall be
deemed to have commenced as to such original Holder, on the Original Issue Date.
11. [Reserved.]
12. No Fractional Shares. No fractional Warrant Shares will be issued
in connection with any exercise of this Warrant. In lieu of any fractional
shares that would otherwise be issuable, the number of Warrant Shares to be
issued shall be rounded down to the next whole number and the Company shall pay
the Holder in cash the fair market value (based on the Closing Bid Price) for
any such fractional shares.
13. Notices. Any and all notices or other communications or deliveries
hereunder (including, without limitation, any Exercise Notice) shall be in
writing and shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in the Purchase Agreement prior to 5:30 p.m., New
York City time, on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in the Purchase Agreement on a day that is not a
Trading Day or later than 5:30 p.m., New York City time, on any Trading Day,
(iii) the Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service specifying next business day delivery, or
(iv) upon actual receipt by the Person to whom such notice is required to be
given, if by hand delivery. The address and facsimile number of a Person for
such notices or communications shall be as set forth in the Purchase Agreement
unless changed by such Person by two Trading Days153 prior notice to the other
Person(s) in accordance with this Section 13.
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11 |
14. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon 15 days153 notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder153s last
address as shown on the Warrant Register.
15. Miscellaneous.
(a) No Rights as a Stockholder.The Holder, solely in such Person’s
capacity as a holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of share capital of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, amalgamation,
conveyance or otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which such Person is then entitled to receive upon the due
exercise of this Warrant. In addition, nothing contained in this Warrant shall
be construed as imposing any liabilities on the Holder to purchase any
securities, whether such liabilities are asserted by the Company or by creditors
of the Company.
(b) Authorized Shares. (i) The Company will take all such reasonable
action as may be necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation or of any
requirements of the Trading Market upon which the Common Stock may be listed.
(ii) Except and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation, amending its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.
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12 |
(iii) Before taking any action which would result in an adjustment in the
number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
(c) Successors and Assigns. Subject to the restrictions on transfer
set forth in this Warrant, and compliance with applicable securities laws, this
Warrant may be assigned by the Holder. This Warrant may not be assigned by the
Company without the written consent of the Holder except to a successor in the
event of a Fundamental Transaction. This Warrant shall be binding on and inure
to the benefit of the Company and the Holder and their respective successors and
assigns. Subject to the preceding sentence, nothing in this Warrant shall be
construed to give to any Person other than the Company and the Holder any legal
or equitable right, remedy or cause of action under this Warrant.
(d) Amendment and Waiver. Except as otherwise provided herein, the
provisions of the Warrants may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder.
(e) Acceptance. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.
(f) Governing Law; Jurisdiction. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH
OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK,
BOROUGH OF MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT. EACH OF THE COMPANY AND THE HOLDER HEREBY
IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA
REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY)
TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THE PURCHASE
AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED
TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.
EACH OF THE COMPANY AND THE HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.
(g) Headings. The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
|
13 |
(h) Severability. In case any one or more of the provisions of this
Warrant shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby, and the Company and the Holder will
attempt in good faith to agree upon a valid and enforceable provision which as
closely as possible reflects the intent of the parties hereto, and upon so
agreeing, shall incorporate such substitute provision in this Warrant.
|
14 |
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
by its authorized officer as of the date first indicated above.
|
TRANSGENOMIC, INC. |
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By: |
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Name: Craig J. Tuttle |
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Title: President/Chief Executive Officer |
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SCHEDULE 1
TRANSGENOMIC, INC.
FORM OF EXERCISE NOTICE
[To be executed by the Holder to purchase shares of Common
Stock under the Warrant]
Ladies and Gentlemen:
(1) The undersigned is the Holder of Warrant No. __________ (the “Warrant”)
issued by Transgenomic, Inc., a Delaware corporation (the “Company”).
Capitalized terms used herein and not otherwise defined herein have the
respective meanings set forth in the Warrant.
(2) The undersigned hereby exercises its right to purchase __________ Warrant
Shares pursuant to the Warrant.
(3) The Holder intends that payment of the Exercise Price shall be made as
(check one):
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Cash Exercise |
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“Cashless Exercise” under Section 10 of the Warrant |
(4) If the Holder has elected a Cash Exercise, the Holder shall pay the sum
of $_______ in immediately available funds to the Company in accordance with the
terms of the Warrant.
(5) Pursuant to this Exercise Notice, the Company shall deliver to the Holder
Warrant Shares determined in accordance with the terms of the Warrant. Please
issue (check applicable box):
|
A certificate of certificates representing the Holder Warrant Shares in the |
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The Holder Warrant Shares in electronic form to the following account: |
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Name and Contact for Broker: |
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Broker no: |
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Account no: |
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Account holder: |
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Dated:_______________, _____ |
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Name of Holder: ___________________________ |
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By: |
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Name: |
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Title: |
(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)
SCHEDULE 2
TRANSGENOMIC, INC.
FORM OF ASSIGNMENT
[To be completed and executed by the Holder only upon transfer
of the Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
(the “Transferee”) the right represented by the within Warrant to purchase
shares of Common Stock of Transgenomic, Inc., a Delaware corporation (the
“Company”) to which the within Warrant relates and appoints attorney to transfer
said right on the books of the Company with full power of substitution in the
premises. In connection therewith, the undersigned represents, warrants,
covenants and agrees to and with the Company that:
|
(a) |
the offer and sale of the Warrant contemplated hereby is being made in |
|
(b) |
the undersigned has not offered to sell the Warrant by any form of general |
|
(c) |
the undersigned has read the Transferee153s investment letter included |
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(d) |
the undersigned understands that the Company may condition the transfer of |
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Dated: , |
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(Signature must conform in all respects to name of holder as specified on the |
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Address of Transferee |
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In the presence of: |
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