Exhibit 10.8

 

EXHIBIT A1

 

Form of Initial Warrant

(See attached)

 

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THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR
TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO
SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL (WHICH OPINION
IS REASONABLY SATISFACTORY TO THE ISSUER OF THESE SECURITIES), SUCH REGISTRATION
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED.

 

Dated: July 14, 2004

   Warrant to Purchase     

100,000 Shares

 

PARADIGM GENETICS, INC.

 

(Incorporated under the laws of the State of Delaware)

 

WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK

 

Warrant Price: $0.72 per share, subject to adjustment as provided below:

 

THIS IS TO CERTIFY that, for value received, Stonegate Securities, Inc. and its
registered assigns (collectively, the “Holder”), is entitled to purchase,
subject to the terms and conditions hereinafter set forth, up to One Hundred
Thousand (100,000) shares of the common stock, no par value (“Common Stock”), of
Paradigm Genetics, Inc., a Delaware corporation (the “Company”), and to receive
certificate(s) for the Common Stock so purchased.

 

1. Exercise Period and Vesting. This Warrant shall vest and become exercisable
upon on or about two months from the date of the issuance of the Warrant if the
Board of Directors of the Company determines such Warrant shall become
exercisable in its sole discretion. The management of the Company will inform
the Holder of its recommendation to the Board regarding exercisability on or
about such date, but no later than 30 days after such date. The exercise period
is the period beginning on the date this Warrant vests and ending at 5:00 p.m.,
Dallas, Texas time, on July 13, 2009 (the “Exercise Period”). This Warrant will
terminate automatically and immediately upon the expiration of the Exercise
Period.

 

2. Exercise of Warrant; Cashless Exercise. This Warrant may be exercised, in
whole or in part, at any time and from time to time during the Exercise Period.
Such exercise shall be accomplished by tender to the Company of the purchase
price set forth above as the warrant price per share multiplied by the number of
shares being purchased (the “Warrant Price”), either (a) in cash, by wire
transfer or by certified check or bank cashier’s check, payable to the order of
the Company, or (b) by surrendering such number of shares of Common Stock
received upon exercise of this Warrant with a current market price equal to the
Warrant Price (a “Cashless Exercise”), together with presentation and surrender
to the Company of this Warrant

 

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with an executed subscription in substantially the form attached hereto as
Exhibit A (the “Subscription”). Upon receipt of the foregoing, the Company will
deliver to the Holder, as promptly as possible, a certificate or certificates
representing the shares of Common Stock so purchased, registered in the name of
the Holder or its transferee (as permitted under Section 3 below). With respect
to any exercise of this Warrant, the Holder will for all purposes be deemed to
have become the holder of record of the number of shares of Common Stock
purchased hereunder on the date this Warrant, a properly executed Subscription
and payment of the Warrant Price is received by the Company (the “Exercise
Date”), irrespective of the date of delivery of the certificate evidencing such
shares, except that, if the date of such receipt is a date on which the stock
transfer books of the Company are closed, such person 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. Fractional shares of Common
Stock will not be issued upon the exercise of this Warrant. In lieu of any
fractional shares that would have been issued but for the immediately preceding
sentence, the Holder will be entitled to receive cash equal to the current
market price of such fraction of a share of Common Stock on the trading day
immediately preceding the Exercise Date. In the event this Warrant is exercised
in part, the Company shall issue a new Warrant to the Holder covering the
aggregate number of shares of Common Stock as to which this Warrant remains
exercisable for.

 

If the Holder elects to conduct a Cashless Exercise, the Company shall cause to
be delivered to the Holder a certificate or certificates representing the number
of shares of Common Stock computed using the following formula:

 

X    =    Y (A-B)                 A

 

Where:              X    = the number of shares of Common Stock to be issued to
Holder;     Y    = the portion of the Warrant (in number of shares of Common
Stock) being exercised by Holder (at the date of such calculation);     A    =
the fair market value of one share of Common Stock on the Exercise Date (as
calculated below); and     B    = Warrant Price (as adjusted to the date of such
calculation).

 

For purposes of the foregoing calculation, “fair market value of one share of
Common Stock on the Exercise Date” shall mean: (i) if the principal trading
market for such securities is a national or regional securities exchange, the
average closing price on such exchange for the ten (10) trading days immediately
prior to such Exercise Date; (ii) if sales prices for shares of Common Stock are
reported by the Nasdaq National Market System or Nasdaq Small Cap Market (or a
similar system then in use), the average last reported sales price for the ten
(10) trading days immediately prior to such Exercise Date; or (iii) if neither
(i) nor (ii) above are

 

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applicable, and if bid and ask prices for shares of Common Stock are reported in
the over-the-counter market by Nasdaq (or, if not so reported, by the National
Quotation Bureau), the average of the high bid and low ask prices so reported
for the ten (10) trading days immediately prior to such Exercise Date.
Notwithstanding the foregoing, if there is no reported closing price, last
reported sales price, or bid and ask prices, as the case may be, for the period
in question, then the current market price shall be determined as of the latest
ten (10) day period prior to such day for which such closing price, last
reported sales price, or bid and ask prices, as the case may be, are available,
unless such securities have not been traded on an exchange or in the
over-the-counter market for 30 or more days immediately prior to the day in
question, in which case the current market price shall be determined in good
faith by, and reflected in a formal resolution of, the Board of Directors of the
Company. The Company acknowledges and agrees that this Warrant was issued on the
Issuance Date.

 

3. Transferability and Exchange.

 

(a) This Warrant, and the Common Stock issuable upon the exercise hereof, may
not be sold, transferred, pledged or hypothecated unless the Company shall have
been provided with an opinion of counsel, or other evidence reasonably
satisfactory to it, that such transfer is not in violation of the Securities
Act, and any applicable state securities laws. Subject to the satisfaction of
the aforesaid condition, this Warrant and the underlying shares of Common Stock
shall be transferable from time to time by the Holder upon written notice to the
Company. If this Warrant is transferred, in whole or in part, the Company shall,
upon surrender of this Warrant to the Company, deliver to each transferee a
Warrant evidencing the rights of such transferee to purchase the number of
shares of Common Stock that such transferee is entitled to purchase pursuant to
such transfer. The Company may place a legend similar to the legend at the top
of this Warrant on any replacement Warrant and on each certificate representing
shares issuable upon exercise of this Warrant or any replacement Warrants. Only
a registered Holder may enforce the provisions of this Warrant against the
Company. A transferee of the original registered Holder becomes a registered
Holder only upon delivery to the Company of the original Warrant and an original
Assignment, substantially in the form set forth in Exhibit B attached hereto.

 

(b) This Warrant is exchangeable upon its surrender by the Holder to the Company
for new Warrants of like tenor and date representing in the aggregate the right
to purchase the number of shares purchasable hereunder, each of such new
Warrants to represent the right to purchase such number of shares as may be
designated by the Holder at the time of such surrender.

 

4. Adjustments to Warrant Price and Number of Shares Subject to Warrant. The
Warrant Price and the number of shares of Common Stock purchasable upon the
exercise of this Warrant are subject to adjustment from time to time upon the
occurrence of any of the events specified in this Section 4. For the purpose of
this Section 4, “Common Stock” means shares now or hereafter authorized of any
class of common stock of the Company and any other stock of the Company, however
designated, that has the right to participate in any distribution of the assets
or earnings of the Company without limit as to per share amount (excluding, and
subject to any prior rights of, any class or series of preferred stock).

 

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(a) In case the Company shall (i) pay a dividend or make a distribution in
shares of Common Stock or other securities, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issue by reclassification of its shares of Common Stock other securities of the
Company, then the Warrant Price in effect at the time of the record date for
such dividend or on the effective date of such subdivision, combination or
reclassification, and/or the number and kind of securities issuable on such
date, shall be proportionately adjusted so that the Holder of any Warrant
thereafter exercised shall be entitled to receive the aggregate number and kind
of shares of Common Stock (or such other securities other than Common Stock) of
the Company, at the same aggregate Warrant Price, that, if such Warrant had been
exercised immediately prior to such date, the Holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, distribution,
subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.

 

(b) In case the Company shall fix a record date for the making of a distribution
to all holders of Common Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the surviving
corporation) of cash, evidences of indebtedness or assets, or subscription
rights or warrants, the Warrant Price to be in effect after such record date
shall be determined by multiplying the Warrant Price in effect immediately prior
to such record date by a fraction, the numerator of which shall be the current
market price per share of Common Stock on such record date, less the amount of
cash so to be distributed (or the fair market value (as determined in good faith
by, and reflected in a formal resolution of, the Board of Directors of the
Company) of the portion of the assets or evidences of indebtedness so to be
distributed, or of such subscription rights or warrants, applicable to one share
of Common Stock, and the denominator of which shall be such current market price
per share of Common Stock. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not so
made, the Warrant Price shall again be adjusted to be the Warrant Price which
would then be in effect if such record date had not been fixed.

 

(c) For the purpose of any computation under any subsection of this Section 4,
the “current market price” per share of Common Stock on any date shall be the
per share price of the Common Stock on the trading day immediately prior to the
event requiring an adjustment hereunder and shall be: (i) if the principal
trading market for such securities is a national or regional securities
exchange, the closing price on such exchange on such day; or (ii) if sales
prices for shares of Common Stock are reported by the Nasdaq National Market
System or Small Cap Market System (or a similar system then in use), the last
reported sales price so reported on such day; or (iii) if neither (i) nor (ii)
above are applicable, and if bid and ask prices for shares of Common Stock are
reported in the over-the-counter market by Nasdaq (or, if not so reported, by
the National Quotation Bureau), the average of the high bid and low ask prices
so reported on such day. Notwithstanding the foregoing, if there is no reported
closing

 

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price, last reported sales price, or bid and ask prices, as the case may be, for
the day in question, then the current market price shall be determined as of the
latest date prior to such day for which such closing price, last reported sales
price, or bid and ask prices, as the case may be, are available, unless such
securities have not been traded on an exchange or in the over-the-counter market
for 30 or more days immediately prior to the day in question, in which case the
current market price shall be determined in good faith by, and reflected in a
formal resolution of, the Board of Directors of the Company.

 

(d) Notwithstanding any provision herein to the contrary, no adjustment in the
Warrant Price shall be required unless such adjustment would require an increase
or decrease of at least one (1%) percent in the Warrant Price; provided,
however, that any adjustments which by reason of this subsection (d) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 4 shall be made to
the nearest cent or the nearest one-hundredth of a share, as the case may be.

 

(e) In the event that at any time, as a result of an adjustment made pursuant to
subsection (a) above, the Holder of any Warrant thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other than
shares of Common Stock, thereafter the number of such other shares so receivable
upon exercise of any Warrant shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares of Common Stock contained in this Section 4, and the other
provisions of this Warrant shall apply on like terms to any such other shares.

 

(f) If the Company merges or consolidates into or with another corporation or
entity, or if another corporation or entity merges into or with the Company
(excluding such a merger in which the Company is the surviving or continuing
corporation and which does not result in any reclassification, conversion,
exchange, or cancellation of the outstanding shares of Common Stock), or if all
or substantially all of the assets or business of the Company are sold or
transferred to another corporation, entity, or person, then, as a condition to
such consolidation, merger, or sale (a “Transaction”), lawful and adequate
provision shall be made whereby the Holder shall have the right from and after
the Transaction to receive, upon exercise of this Warrant and upon the terms and
conditions specified herein and in lieu of the shares of the Common Stock that
would have been issuable if this Warrant had been exercised immediately before
the Transaction, such shares of stock, securities, or assets as the Holder would
have owned immediately after the Transaction if the Holder had exercised this
Warrant immediately before the effective date of the Transaction.

 

5. Registration Rights. The Holder shall be entitled to the benefits of the
registration rights set forth in Exhibit C attached hereto.

 

6. Reservation of Shares. The Company agrees at all times to reserve and hold
available out of its authorized but unissued shares of Common Stock the number
of shares of Common Stock issuable upon the full exercise of this Warrant. The
Company further covenants and agrees that all shares of Common Stock that may be
delivered upon the exercise of this Warrant will, upon delivery, be fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
purchase thereof hereunder.

 

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7. Notices to Holder. Upon any adjustment of the Warrant Price (or number of
shares of Common Stock purchasable upon the exercise of this Warrant) pursuant
to Section 4, the Company shall promptly thereafter cause to be given to the
Holder written notice of such adjustment. Such notice shall include the Warrant
Price (and/or the number of shares of Common Stock purchasable upon the exercise
of this Warrant) after such adjustment, and shall set forth in reasonable detail
the Company’s method of calculation and the facts upon which such calculations
were based. Where appropriate, such notice shall be given in advance and
included as a part of any notice required to be given under the other provisions
of this Section 7.

 

In the event of (a) any fixing by the Company of a record date with respect to
the holders of any class of securities of the Company for the purpose of
determining which of such holders are entitled to dividends or other
distributions, or any rights to subscribe for, purchase or otherwise acquire any
shares of capital stock of any class or any other securities or property, or to
receive any other right, (b) any capital reorganization of the Company, or
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets or business of the Company
to, or consolidation or merger of the Company with or into, any other entity or
person, or (c) any voluntary or involuntary dissolution or winding up of the
Company, then and in each such event the Company will give the Holder a written
notice specifying, as the case may be (i) the record date for the purpose of
such dividend, distribution, or right, and stating the amount and character of
such dividend, distribution, or right; or (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, conveyance, 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 (or such capital stock or securities receivable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock securities) for securities or other property deliverable upon such
event. Any such notice shall be given at least 10 days prior to the earliest
date therein specified.

 

8. No Rights as a Stockholder. This Warrant does not entitle the Holder to any
voting rights or other rights as a stockholder of the Company, nor to any other
rights whatsoever except the rights herein set forth.

 

9. Additional Covenants of the Company. For so long as the Common Stock is
listed for trading on any regional or national securities exchange or Nasdaq
(National Market or Small Cap System), the Company shall, upon issuance of any
shares for which this Warrant is exercisable, at its expense, promptly obtain
and maintain the listing of such shares. The Company shall comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act for so long
as and to the extent that such requirements apply to the Company.

 

The Company shall not, by amendment of its Articles 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

 

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terms of this Warrant. Without limiting the generality of the foregoing, the
Company (a) will at all times reserve and keep available, solely for issuance
and delivery upon exercise of this Warrant, shares of Common Stock issuable from
time to time upon exercise of this Warrant, (b) will not increase the par value
of any shares of capital stock receivable upon exercise of this Warrant above
the amount payable therefore upon such exercise, and (c) will take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable stock.

 

10. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Company, the Holder and their respective successors and
permitted assigns.

 

11. Notices. The Company agrees to maintain a ledger of the ownership of this
Warrant (the “Ledger”). Any notice hereunder shall be given by registered or
certified mail if to the Company, at its principal executive office and, if to
the Holder, to its address shown in the Ledger of the Company; provided,
however, that the Holder may at any time on three (3) days written notice to the
Company designate or substitute another address where notice is to be given.
Notice shall be deemed given and received after a certified or registered
letter, properly addressed with postage prepaid, is deposited in the U.S. mail.

 

12. Severability. Every provision of this Warrant is intended to be severable.
If any term or provision hereof is illegal or invalid for any reason whatsoever,
such illegality or invalidity shall not affect the remainder of this Warrant.

 

13. Governing Law. This Warrant shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to the conflicts of law
thereof.

 

14. Attorneys’ Fees. In any action or proceeding brought to enforce any
provision of this Warrant, the prevailing party shall be entitled to recover
reasonable attorneys’ fees in addition to its costs and expenses and any other
available remedy.

 

15. Entire Agreement. This Warrant (including the Exhibits attached hereto)
constitutes the entire understanding between the Company and the Holder with
respect to the subject matter hereof, and supersedes all prior negotiations,
discussions, agreements and understandings relating to such subject matter.

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officer as of the date first set forth above.

 

PARADIGM GENETICS, INC. By:  

 

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Name:  

 

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Title:  

 

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Exhibit A

 

SUBSCRIPTION FORM

 

(To be Executed by the Holder to Exercise the Rights To Purchase Common Stock
Evidenced by the Within Warrant)

 

The undersigned hereby irrevocably subscribes for              shares (the
“Stock”) of the Common Stock of Paradigm Genetics, Inc. (the “Company”) pursuant
to and in accordance with the terms and conditions of the attached Warrant (the
“Warrant”), and hereby makes payment of $             therefore by [tendering
cash, wire transferring or delivering a certified check or bank cashier’s check,
payable to the order of the Company] [surrendering              shares of Common
Stock received upon exercise of the Warrant, which shares have a current market
price equal to such payment as required in Section 2 of the Warrant]. The
undersigned requests that a certificate for the Stock be issued in the name of
the undersigned and be delivered to the undersigned at the address stated below.
If the Stock is not all of the shares purchasable pursuant to the Warrant, the
undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.

 

In connection with the issuance of the Stock, I hereby represent to the Company
that I am acquiring the Stock for my own account for investment and not with a
view to, or for resale in connection with, a distribution of the shares within
the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

 

I understand that because the Stock has not been registered under the Securities
Act, I must hold such Stock indefinitely unless the Stock is subsequently
registered and qualified under the Securities Act or is exempt from such
registration and qualification. I shall make no transfer or disposition of the
Stock unless (a) such transfer or disposition can be made without registration
under the Securities Act by reason of a specific exemption from such
registration and such qualification, or (b) a registration statement has been
filed pursuant to the Securities Act and has been declared effective with
respect to such disposition. I agree that each certificate representing the
Stock delivered to me shall bear substantially the same as set forth on the
front page of the Warrant.

 

I agree that each certificate representing the Stock delivered to me shall bear
substantially the same legend as set forth on the front page of the Warrant.

 

I further agree that the Company may place stop orders on the certificates
evidencing the Stock with the transfer agent, if any, to the same effect as the
above legend. The legend and stop transfer notice referred to above shall be
removed only upon my furnishing to the Company of an opinion of counsel
(reasonably satisfactory to the Company) to the effect that such legend may be
removed.

 

Dated:

 

 

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      Signed:  

 

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            Address:  

 

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Exhibit B

 

ASSIGNMENT

 

(To be Executed by the Holder to Effect Transfer of the Attached Warrant)

 

FOR VALUE RECEIVED                                                              
hereby sells, assigns and transfers to                                         
the Warrant attached hereto and the rights represented thereby to purchase
             shares of Common Stock in accordance with the terms and conditions
hereof, and does hereby irrevocably constitute and appoint
                                                          as attorney to
transfer such Warrant on the books of the Company with full power of
substitution.

 

Dated:

 

 

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      Signed:  

 

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Please print or type name

and address of Assignee:

 

Please insert Social Security or

Tax Identification Number of Assignee:

 

 

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Placement Agency Agreement paradigm genetics Final Execution