Exhibit 10.1

 

WARRANT AGREEMENT

 

THIS WARRANT AGREEMENT made as of April 12, 2019 (the “Issuance Date”), between
Outlook Therapeutics, Inc., a Delaware corporation (the “Company”), and American
Stock Transfer & Trust Company, LLC, a New York limited liability trust company
(the “Warrant Agent”).

 

WHEREAS, the Company has sold (i) 10,340,000 shares of common stock, par value
$0.01 per share (the “Common Stock” and includes any share capital into which
such Common Stock shall have been changed or any share capital resulting from a
reclassification of such Common Stock), of the Company, (ii) 15-month warrants
(each a “15-Month Warrant” and, collectively, the “15-Month Warrants”) to
purchase 10,340,000 shares of Common Stock (collectively, the “15-Month Warrant
Shares”), subject to adjustment as described therein, and (iii) five-year
warrants (each, a “Five-Year Warrant,” collectively, the “Five-Year Warrants”
and, together with the 15-Month Warrants, the “Warrants”) to purchase 10,340,000
shares of Common Stock (each, a “Five-Year Warrant Share,” collectively, the
“Five-Year Warrant Shares” and, together with the 15-Month Warrant Shares, the
“Warrant Shares”), subject to adjustment as described herein, pursuant to an
Underwriting Agreement, dated April 10, 2019, between the Company and
Oppenheimer & Co. Inc., as representative of the several underwriters named
therein (the “Underwriting Agreement”);

 

WHEREAS, the Company has filed with the Securities and Exchange Commission a
Registration Statement, No. 333-229761 on Form S-1 (as the same may be amended
from time to time), which was declared effective on April 9, 2019 (the “Initial
Registration Statement”), and has filed an additional registration statement
pursuant to Rule 462(b) of the 1933 Act (as defined below), which became
effective upon filing (together with the Initial Registration Statement, the
“Registration Statement”) for the registration, under the Securities Act of
1933, as amended (the “1933 Act”) of the Common Stock, the Warrants and the
Warrant Shares;

 

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company,
and the Warrant Agent is willing to so act, in connection with the issuance,
registration, transfer, exchange and exercise of the Warrants;

 

WHEREAS, the Company desires to provide for the form and provisions of the
Warrants, the terms upon which they shall be issued and exercised, and the
respective rights, limitation of rights, and immunities of the Company, the
Warrant Agent, and the holders of the Warrants; and

 

WHEREAS, all acts and things have been done and performed that are necessary to
make the Warrants, when executed on behalf of the Company and countersigned by
or on behalf of the Warrant Agent, as provided herein, the valid, binding and
legal obligations of the Company, and to authorize the execution and delivery of
this Warrant Agreement.

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:

 

1.         Appointment of Warrant Agent. The Company hereby appoints the Warrant
Agent to act as agent for the Company for the Warrants, and the Warrant Agent
hereby accepts such appointment and agrees to perform the same in accordance
with the express terms and conditions set forth in this Warrant Agreement.

 

   

 

 

2.         Warrants.

 

2.1       Form of Warrant. The Warrants shall be registered securities and shall
be initially evidenced by global Warrant certificates (each a “Global
Certificate” and collectively the “Global Certificates”) in the form
of Exhibit A to this Warrant Agreement in the case of the Five-Year Warrants and
in the form of Exhibit B to this Warrant Agreement in the case of the 15-Month
Warrants, each of which shall be deposited on behalf of the Company with a
custodian for The Depository Trust Company (“DTC”) and registered in the name of
Cede & Co., a nominee of DTC. If DTC subsequently ceases to make its settlement
system available for the Warrants, the Company may instruct the Warrant Agent
regarding making arrangements for book-entry settlement. In the event that the
Warrants are not eligible for, or it is no longer necessary to have the Warrants
available in, registration in the name of Cede & Co., a nominee of DTC, the
Company may instruct the Warrant Agent to provide written instructions to DTC to
deliver to the Warrant Agent for cancellation the Global Certificates, and the
Company shall instruct the Warrant Agent to deliver to each Holder (as defined
below) separate certificates evidencing Warrants (“Definitive Certificates” and,
together with the Global Certificates, “Warrant Certificates”), in the form
of Exhibit C to this Warrant Agreement in the case of the Five-Year Warrants and
Exhibit D to this Warrant Agreement in the case of the 15-Month Warrants. The
Warrants represented by the Global Certificates are referred to as “Global
Warrants”.

 

2.2       Registration.

 

2.2.1       Warrant Register. The Warrant Agent shall maintain books (“Warrant
Register”) for the registration of original issuance and the registration of
transfer of the Warrants. Any Person in whose name ownership of a beneficial
interest in the Warrants evidenced by a Global Certificate is recorded in the
records maintained by DTC or its nominee shall be deemed the “beneficial owner”
thereof, provided that all such beneficial interests shall be held through a
Participant (as defined below), which shall be the registered holder of such
Warrants.

 

2.2.2       Issuance of Warrants. Upon the initial issuance of the Warrants, the
Warrant Agent shall issue the Global Certificates and deliver the Warrants in
the DTC settlement system in accordance with written instructions delivered to
the Warrant Agent by the Company. Ownership of beneficial interests in the
Warrants shall be shown on, and the transfer of such ownership shall be effected
through, records maintained (i) by DTC and (ii) by institutions that have
accounts with DTC (each, a “Participant”), subject to a Holder’s right to elect
to receive a Warrant in certificated form in the form of Exhibit C to this
Warrant Agreement in the case of the Five-Year Warrants and Exhibit D to this
Warrant Agreement in the case of the 15-Month Warrants. Any Holder desiring to
elect to receive a Warrant in certificated form shall make such request in
writing delivered to the Warrant Agent pursuant to Section 2.2.6, and shall
surrender to the Warrant Agent the interest of the Holder on the books of the
Participant evidencing the Warrants that are to be represented by a Definitive
Certificate through the DTC settlement system. Thereupon, the Warrant Agent
shall countersign and deliver to the person entitled thereto a Warrant
Certificate or Warrant Certificates, as the case may be, as so requested.

 

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2.2.3       Beneficial Owner; Holder. Prior to due presentment for registration
of transfer of any Warrant, the Company and the Warrant Agent may deem and treat
the person in whose name that Warrant shall be registered on the Warrant
Register (the “Holder”) as the absolute owner of such Warrant for purposes of
any exercise thereof, and for all other purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Warrant Agent or any agent of the Company or the Warrant Agent from giving
effect to any written certification, proxy or other authorization furnished by
DTC governing the exercise of the rights of a holder of a beneficial interest in
any Warrant. The rights of beneficial owners in a Warrant evidenced by a Global
Certificate shall be exercised by the Holder or a Participant through the DTC
system, except to the extent set forth herein or in such Global Certificate.

 

2.2.4       Execution. The Warrant Certificates shall be executed on behalf of
the Company by any authorized officer of the Company (an “Authorized Officer”),
which need not be the same authorized signatory for all of the Warrant
Certificates, either manually or by facsimile signature. The Warrant
Certificates shall be countersigned by an authorized signatory of the Warrant
Agent, which need not be the same signatory for all of the Warrant Certificates,
and no Warrant Certificate shall be valid for any purpose unless so
countersigned. In case any Authorized Officer of the Company that signed any of
the Warrant Certificates ceases to be an Authorized Officer of the Company
before countersignature by the Warrant Agent and issuance and delivery by the
Company, such Warrant Certificates, nevertheless, may be countersigned by the
Warrant Agent, issued and delivered with the same force and effect as though the
person who signed such Warrant Certificates had not ceased to be such officer of
the Company; and any Warrant Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Warrant
Certificate, shall be an Authorized Officer of the Company authorized to sign
such Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such an Authorized Officer.

 

2.2.5       Proxies. The Holder of a Warrant may grant proxies or otherwise
authorize any person, including the Participants and beneficial holders that may
own interests through the Participants, to take any action that a Holder is
entitled to take under this Warrant Agreement or the
Warrants; provided, however, that at all times that Warrants are evidenced by a
Book Entry Warrant Certificate, exercise of those Warrants shall be effected on
their behalf by Participants through DTC in accordance the procedures
administered by DTC.

 

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2.2.6       Warrant Certificate Request. A Holder has the right to elect at any
time or from time to time a Warrant Exchange (as defined below) pursuant to a
Warrant Certificate Request Notice (as defined below). Upon written notice by a
Holder to the Warrant Agent for the exchange of some or all of such Holder’s
Warrants for a Definitive Certificate evidencing the same number of Warrants,
which request shall be in the form attached hereto as Exhibit E in the case of
the Five-Year Warrants and Exhibit F to this Warrant Agreement in the case of
the 15-Month Warrants (a “Warrant Certificate Request Notice” and the date of
delivery of such Warrant Certificate Request Notice by the Holder, the “Warrant
Certificate Request Notice Date” and the deemed surrender upon delivery by the
Holder of a number of Global Warrants for the same number of Warrants evidenced
by a Definitive Certificate, a “Warrant Exchange”), the Warrant Agent shall, as
soon as practicable, effect the Warrant Exchange and shall, as soon as
practicable, issue and deliver to the Holder a Definitive Certificate for such
number of Warrants in the name set forth in the Warrant Certificate Request
Notice. Such Definitive Certificate shall be dated the original issue date of
the Warrants, shall be manually executed by an authorized signatory of the
Company, shall be in the form attached hereto as Exhibit C in the case of the
Five-Year Warrants and in the form attached hereto as Exhibit D in the case of
the 15-Month Warrants, and shall be reasonably acceptable in all respects to
such Holder. In connection with a Warrant Exchange, the Company agrees to
deliver, or to direct the Warrant Agent to deliver, the Definitive Certificate
to the Holder within three (3) Business Days of the Warrant Certificate Request
Notice pursuant to the delivery instructions in the Warrant Certificate Request
Notice (“Warrant Certificate Delivery Date”). If the Company or the Warrant
Agent fails for any reason to deliver to the Holder the Definitive Certificate
subject to the Warrant Certificate Request Notice by the Warrant Certificate
Delivery Date, the Company shall pay to the Holder, in cash, as liquidated
damages and not as a penalty, for each $1,000 of Warrant Shares evidenced by
such Definitive Certificate (based on the Weighted Average Price (as defined in
the Warrants) of the Common Stock on the Warrant Certificate Request Notice
Date), $10 per Business Day for each Business Day after such Warrant Certificate
Delivery Date until such Definitive Certificate is delivered or, prior to
delivery of such Warrant Certificate, the Holder rescinds such Warrant Exchange.
The Company covenants and agrees that, upon the date of delivery of the Warrant
Certificate Request Notice, the Holder shall be deemed to be the holder of the
Definitive Certificate and, notwithstanding anything to the contrary set forth
herein, the Definitive Certificate shall be deemed for all purposes to contain
all of the terms and conditions of the Warrants evidenced by such Warrant
Certificate and the terms of this Warrant Agreement, shall not apply to the
Warrants evidenced by the Definitive Certificate. The Warrant Agent shall have
no responsibility for any liquidated damages that may be payable or paid to any
Person under this paragraph for any failure by the Warrant Agent to deliver to
the Holder the Definitive Certificate, on the Company’s behalf. In addition, the
Company shall indemnify and hold harmless the Warrant Agent against all claims
made against the Warrant Agent for any such failure except that the Company
shall not be obligated to provide any such indemnification if it is determined
by a final, non-appealable judgment of a court of competent jurisdiction that
such failure is due to the Warrant Agent’s gross negligence, bad faith or
willful misconduct.

 

2.2.7       For purposes of clarity, without limiting the rights and immunities
of the Warrant Agent, if there is a conflict between the express terms of this
Warrant Agreement and any Definitive Certificate in the form of Exhibit C in the
case of the Five-Year Warrants and Exhibit D in the case of the 15-Month
Warrants hereto with respect to the terms of the Warrants, the terms of such
Definitive Certificate shall govern and control.

 

2.3       Detachability of Warrants. The Common Stock and the Warrants will be
issued separately and will be separately transferable immediately upon issuance.

 

3.         Terms and Exercise of Warrants.

 

3.1       Exercise Price. The exercise price per whole share of the Common Stock
under each Warrant shall be $2.90, subject to adjustment hereunder (the
“Exercise Price”).

 

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3.2       Duration of Warrants. A Warrant may be exercised only during the
period (the “Exercise Period”) commencing on the Issuance Date and terminating
at 5:00 P.M., Eastern time on the date sixty (60) months after the Issuance Date
in the case of the Five-Year Warrants and on the date fifteen (15) months after
the Issuance Date in the case of the 15-Month Warrants or, if any such date
falls on a day other than a Business Day or on which trading does not take place
on the Principal Market (a “Holiday”), the next day that is not a Holiday (the
“Expiration Date”). Each Warrant not exercised on or before the applicable
Expiration Date shall become void, and all rights thereunder and all rights in
respect thereof under this Warrant Agreement shall cease at the close of
business on the applicable Expiration Date.

 

3.3       Exercise of Warrants.

 

3.3.1       Exercise and Payment. A registered holder may exercise a Warrant by
delivering, not later than 5:00 P.M., Eastern time, on any Business Day during
the Exercise Period (the “Exercise Date”) to the Warrant Agent at its offices
designated for such purpose (i) the Warrant Certificate evidencing the Warrants
to be exercised, or, in the case of a Book-Entry Warrant Certificate, the
Warrants to be exercised (the “Book-Entry Warrants”) free on the records of the
Depository to an account of the Warrant Agent at the Depository designated for
such purpose in writing by the Warrant Agent to the Depository from time to
time, and (ii) an election to purchase the Warrant Shares underlying the
Warrants to be exercised (the “Election to Purchase” and together with the
Warrant Certificates and the Book-Entry Warrants, the “Warrant Exercise
Documents”), properly completed and duly executed by the registered holder on
the reverse of the Warrant Certificate, accompanied by a signature guarantee and
such other documentation as the Warrant Agent may reasonably request, or, in the
case of a Book-Entry Warrant Certificate, properly delivered by the Participant
in accordance with the Depository’s procedures. Within one Trading Day after the
Exercise Date, such holder must pay the Warrant Price for each Warrant to be
exercised in lawful money of the United States of America by wire, certified or
official bank check, or wire transfer, in immediately available funds unless
such holder has elected to make a cashless exercise pursuant to Section 3.3.8.
The term “Warrant Price” as used in this Warrant Agreement refers to price per
share of Common Stock at which shares may be purchased at the time the Warrant
is exercised.

 

If any of (A) the Warrant Certificate or the Book-Entry Warrants, (B) the
Election to Purchase, or (C) the Warrant Price therefor, is received by the
Warrant Agent after 5:00 P.M., Eastern time, on the specified Exercise Date, the
Warrants will be deemed to be received on the Business Day next succeeding the
Exercise Date. If the date specified as the Exercise Date is not a Business Day,
the Warrants will be deemed to be received on the next succeeding day that is a
Business Day. If the Warrants are received or deemed to be received after the
Expiration Date, the exercise thereof will be null and void and any funds
delivered to the Warrant Agent will be returned to the registered holder or
Participant, as the case may be, as soon as practicable. In no event will a
registered holder or Participant be entitled to interest accrued on funds
deposited with the Warrant Agent in respect of an exercise or attempted exercise
of Warrants. The Warrant Agent shall not have any responsibility or liability
relating to the determination as to the validity of any exercise of Warrants
which determination will be made by the Company and the applicable registered
holder, and the Warrant Agent may rely upon the instructions of the Company
regarding the validity of any exercise of Warrants. The Warrant Agent shall not
have any obligation to inform a registered holder of the invalidity of any
exercise of Warrants. If the Company believes that an exercise by a registered
holder is invalid the Company will promptly notify such registered holder of the
such fact and the reasons why it believes the exercise was invalid and will
provide a copy of such notice to the Warrant Agent as soon as practicable.

 

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The Warrant Agent shall forward funds received for warrant exercises in a given
month by the 5th Business Day of the following month by wire transfer to an
account designated by the Company in writing.

 

All funds received by the Warrant Agent under this Warrant Agreement that are to
be distributed or applied by the Warrant Agent in the performance of services
(the “Funds”) shall be held by the Warrant Agent as agent for the Company and
deposited in one or more bank accounts to be maintained by the Warrant Agent in
its name as agent for the Company. Until paid pursuant to the terms of this
Warrant Agreement, the Warrant Agent will hold the Funds through such accounts
in: deposit accounts of commercial banks with Tier 1 capital exceeding $1
billion or with an average rating above investment grade by Standard and Poor’s
Corporation (LT Local Issuer Credit Rating), Moody’s Investors Service, Inc.
(Long Term Rating) and Fitch Ratings, Inc. (LT Issuer Default Rating) (each as
reported by Bloomberg Finance L.P.). The Warrant Agent shall have no
responsibility or liability for any diminution of the Funds that may result from
any deposit made by the Warrant Agent in accordance with this paragraph,
including any losses resulting from a default by any bank, financial institution
or other third party. The Warrant Agent may from time to time receive interest,
dividends or other earnings in connection with such deposits. The Warrant Agent
shall not be obligated to pay such interest, dividends or earnings to the
Company, any holder or any other Person.

 

3.3.2       Issuance of Certificates. The Warrant Agent shall, within a
reasonable time, advise the Company and the Company’s transfer agent and
registrar (the “Transfer Agent”) in respect of (a) the Warrant Shares issuable
upon such exercise as to the number of Warrants exercised in accordance with the
terms and conditions of this Warrant Agreement, (b) the instructions of each
registered holder or Participant, as the case may be, with respect to delivery
of the Warrant Shares issuable upon such exercise, and the delivery of
definitive Warrant Certificates, as appropriate, evidencing the balance, if any,
of the Warrants remaining after such exercise, (c) in case of a Book-Entry
Warrant Certificate, the notation that shall be made to the records maintained
by the Depository, its nominee for each Book-Entry Warrant Certificate, or a
Participant, as appropriate, evidencing the balance, if any, of the Warrants
remaining after such exercise and (d) such other information as the Company, the
Warrant Agent or such transfer agent and registrar shall reasonably require. So
long as the Holder delivers the Warrant Price (or notice of a Cashless Exercise,
if applicable) on or prior to the first (1st) Trading Day following the date on
which the Warrant Exercise Documents have been delivered to the Warrant Agent,
then on or prior to the earlier of (i) the second (2nd) Trading Day and (ii) the
number of Trading Days comprising the Standard Settlement Period, in each case
following the date on which the Warrant Exercise Documents have been delivered
to the Company, or, if the Holder does not deliver the Warrant Price (or notice
of a Cashless Exercise, if applicable) on or prior to the first (1st) Trading
Day following the date on which the Warrant Exercise Documents have been
delivered to the Warrant Agent, then on or prior to the first (1st) Trading Day
following the date on which the Warrant Price (or notice of a Cashless Exercise)
is delivered (such earlier date, or if later, the earliest day on which the
Company is required to deliver Warrant Shares pursuant to this Section 1(a), the
“Share Delivery Date”), the Company shall cause the Warrant Agent to
(X) provided that the Transfer Agent is participating in the DTC Fast Automated
Securities Transfer Program, credit such aggregate number of Warrant Shares to
which the Holder is entitled pursuant to such exercise to the Holder’s or its
designee’s balance account with DTC through its Deposit / Withdrawal At
Custodian system, or (Y) if the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, issue and dispatch by overnight
courier to the address or e-mail address as specified in the Warrant Exercise
Documents, evidence of credit of book-entry shares, registered in the name of
the Holder or its designee, for the number of Warrant Shares to which the Holder
is entitled pursuant to such exercise. If the Warrant Agent fails for any reason
to deliver to such registered holder or Participant, as the case may be, the
Warrant Shares subject to an exercise notice by the Share Delivery Date, the
Company shall pay to the registered holder, in cash, as liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the Weighted Average Price of the Common Stock on the date of the
applicable exercise notice), $10 per Trading Day (increasing to $20 per Trading
Day on the fifth Trading Day after such liquidated damages begin to accrue) for
each Trading Day after such Share Delivery Date until such Warrant Shares are
delivered or the registered holder rescinds such exercise. The Warrant Agent
shall have no responsibility for any liquidated damages that may be payable or
paid to any registered holder or Participant under this paragraph for any
failure by the Warrant Agent to execute, issue and deliver, on the Company’s
behalf, the Warrant Shares as required by this paragraph. In addition, the
Company shall indemnify and hold harmless the Warrant Agent against all claims
made against the Warrant Agent for any such failure except that the Company
shall not be obligated to provide any such indemnification if it is determined
by a final, non-appealable judgment of a court of competent jurisdiction that
such failure is due to the Warrant Agent’s gross negligence, bad faith or
willful misconduct.

 

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If the Warrant Agent fails to comply with the preceding paragraphs in this
Section 3.3.2 by the Share Delivery Date, then, without limiting the rights and
immunities of the Warrant Agent hereunder, in addition to other rights it may
have hereunder, the registered holder or Participant will have the right to
rescind its exercise.

 

3.3.3       Valid Issuance. All shares of Common Stock issued upon the proper
exercise of a Warrant in conformity with this Warrant Agreement shall be validly
issued, fully paid and nonassessable.

 

3.3.4       Dividends. The accrual of dividends, if any, on the Warrant Shares
issued hereunder will be governed by the terms generally applicable to the
Common Stock. From and after the issuance of such Warrant Shares, the former
holder of the Warrants exercised will be entitled to the benefits generally
available to other holders of Common Stock, including the accrual of dividends,
if any, on such Warrant Shares even prior to exercise of such Warrant Shares,
and such former holder’s right to receive payments of dividends and any other
amounts payable in respect of the Warrant Shares shall be governed by, and shall
be subject to, the terms and provisions generally applicable to the Common
Stock.

 

3.3.5       No Fractional Exercise. A registered holder may exercise a Warrant
from time to time only for whole shares of Common Stock. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of a
Warrant. As to any fraction of a share that the holder would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price. If fewer than all of the Warrants evidenced by a Warrant
Certificate are exercised, a new Warrant Certificate for the number of
unexercised Warrants remaining shall be executed by the Company and
countersigned by the Warrant Agent as provided in Section 2 of this Warrant
Agreement, and delivered to the holder of the Warrant Certificate at the address
specified on the books of the Warrant Agent or as otherwise specified in writing
by such registered holder. If fewer than all the Warrants evidenced by a
Book-Entry Warrant Certificate are exercised, a notation shall be made to the
records maintained by the Depository, its nominee for each Book-Entry Warrant
Certificate, or a Participant, as appropriate, evidencing the balance of the
Warrants remaining after such exercise. Whenever a payment for fractional shares
is to be made by the Warrant Agent under this Warrant Agreement, the Company
shall promptly prepare and deliver to the Warrant Agent a certificate setting
forth in reasonable detail the facts related to such payments and the prices and
formulas utilized in calculating such payments. The Warrant Agent shall be fully
protected in relying upon such a certificate and shall have no duty with respect
to, and shall not be deemed to have knowledge of, any payment for fractional
shares under this Warrant Agreement relating to the payment of fractional shares
unless and until the Warrant Agent shall have received such a certificate and
sufficient monies. The Company shall provide an initial funding of one thousand
dollars ($1,000) for the purpose of issuing cash in lieu of fractional shares.
From time to time thereafter, the Warrant Agent may request additional funding
to cover payments for fractional Warrant Shares. The Warrant Agent shall have no
obligation to make such payments for fractional Warrant Shares unless the
Company shall have provided the necessary funds to pay in full all amounts due
and payable with respect thereto. Upon expiration of the term of all Warrants or
the earlier exercise of all Warrants any balance remaining of such funds shall
be paid to the Company.

 

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3.3.6       No Transfer Taxes. Issuance of Warrant Shares shall be made without
charge to a registered holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes
and expenses shall be paid by the Company, and such Warrant Shares shall be
issued in the name of the registered holder or in such name or names as may be
directed by the registered holder; provided, however, that in the event Warrant
Shares are to be issued in a name other than the name of the registered holder,
a Warrant when surrendered for exercise shall be accompanied by the Assignment
Form attached hereto duly executed by the registered holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto. The Company shall pay all transfer
agent fees required for same-day processing of any exercise notice. The Warrant
Agent shall not have any duty or obligation to take any action under any section
of this Warrant Agreement that requires the payment of taxes and/or charges
unless and until it is satisfied that all such payments have been made.

  

3.3.7       Date of Issuance. Each person in whose name any book-entry notation
for shares of Common Stock is issued shall for all purposes be deemed to have
become the holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Warrant Price was made, irrespective of the date
of such book entry, except that, if the date of such surrender and payment is a
date when the stock transfer books of the Company are closed, such person shall
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. Upon
receipt by the Company of a duly executed Notice of Exercise (which may be by
facsimile or email), a registered holder shall be deemed to have exercised its
Warrant as specified in the Notice of Exercise for purposes of Regulation SHO
promulgated under the Securities Exchange Act of 1934, as amended (the “1934
Act”). A holder whose interest in a Warrant is a beneficial interest in
certificate(s) representing a Warrant held in book-entry form through DTC shall
be deemed to have exercised its interest in a Warrant upon instructing its
broker that is a DTC participant to exercise its interest in a Warrant, for
purposes of Regulation SHO promulgated under the 1934 Act.

 

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3.3.8       Optional Cashless Exercise. A Cashless Exercise (as defined below)
may occur (i) in the case of the 15-Month Warrants only, in whole or in part for
a number of whole 15-Month Warrant Shares, after May 12, 2019 (the “Cashless
Date”), if the Weighted Average Price of the Common Stock on any single Trading
Day on or after the Cashless Date and prior to the date of such Cashless
Exercise fails to exceed the Exercise Price in effect as of the date hereof
(subject to adjustment for any stock splits, stock dividends, stock
combinations, recapitalizations and similar events) in which event, in lieu of
the formula below, the aggregate number of 15-Month Warrant Shares issuable in
such cashless exercise pursuant to any given Exercise Notice electing to effect
a Cashless Exercise shall equal the product of (x) the aggregate number of
15-Month Warrant Shares for which the 15-Month Warrants are exercised as if such
exercise were by means of a cash exercise rather than a Cashless Exercise and
(y) 0.60; and (ii) if at any time during the term of this Warrant Agreement
there is no effective registration statement registering, or no current
prospectus available for, the issuance or resale of the Warrant Shares by the
registered holder, then the Warrants may also be exercised, in whole or in part,
at such time by means of a “cashless exercise” in which the holder shall be
entitled to receive a number of Warrant Shares determined according to 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 of shares with respect to which the Warrants are then being
exercised.

 

B= as applicable: (i) the Closing Sale Price of the Common Stock on the Trading
Day immediately preceding the date of the applicable Exercise Notice if such
Exercise Notice is (1) both executed and delivered pursuant to
Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and
delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening
of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS
promulgated under the federal securities laws) on such Trading Day, (ii) at the
option of the Holder, either (y) the Weighted Average Price on the Trading Day
immediately preceding the date of the applicable Notice of Exercise or (z) the
Bid Price of the Common Stock as of the time of the Holder’s execution of the
applicable Exercise Notice if such Exercise Notice is executed during “regular
trading hours” on a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular trading hours” on a
Trading Day) pursuant to Section 1(a) hereof or (iii) the Closing Sale Price of
the Common Stock on the date of the applicable Exercise Notice if the date of
such Exercise Notice is a Trading Day and such Exercise Notice is both executed
and delivered pursuant to Section 1(a) hereof after the close of “regular
trading hours” on such Trading Day.

 

 9 

 

 

C= the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

The Company agrees to make all calculations related to a Cashless Exercise and
will provide the Warrant Agent with issuance instructions.

 

If Warrant Shares are issued in such a cashless exercise, the Company
acknowledges and agrees that in accordance with Section 3(a)(9) of the 1933 Act,
the Warrant Shares shall take on the registered characteristics of the Warrants
being exercised, and the holding period of the Warrants being exercised may be
tacked on to the holding period of the Warrant Shares. The Company agrees not to
take any position contrary to this Section 3.3.8.

 

3.3.9       Disputes. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the registered holder the number of Warrant Shares that
are not disputed. Without limiting the rights of a Holder to receive Warrant
Shares on a “cashless exercise,” and to receive the cash payments contemplated
pursuant to Sections 3.3.2, 3.3.5, 3.4 and 4.5, in no event will the Company be
required to pay to the Holder any cash or other consideration or otherwise net
cash settle a Warrant exercise.

 

 10 

 

 

3.3.10       Limitations on Exercise. Notwithstanding anything to the contrary
contained herein, the Company shall not effect the exercise of any portion of a
Warrant, and the Holder shall not have the right to exercise any portion of a
Warrant, pursuant to the terms and conditions of the Warrant and any such
exercise shall be null and void and treated as if never made, to the extent that
after giving effect to such exercise, the Holder together with the other
Attribution Parties collectively would beneficially own in excess of
[4.99][9.99%] (the “Maximum Percentage”) of the number of shares of Common Stock
outstanding immediately after giving effect to such exercise. For purposes of
the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by the Holder and the other Attribution Parties shall include
the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon
exercise of the Warrants with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of Common Stock
that would be issuable upon (A) exercise of the remaining, unexercised portion
of the Warrants beneficially owned by the Holder or any of the other Attribution
Parties and (B) exercise or conversion of the unexercised or unconverted portion
of any other securities of the Company (including, without limitation, any
convertible notes or convertible preferred stock or warrants, including the
other Warrants) beneficially owned by the Holder or any other Attribution Party
subject to a limitation on conversion or exercise analogous to the limitation
contained in this Section 3.3.10. For purposes of this Section 3.3.10,
beneficial ownership shall be calculated in accordance with Section 13(d) of the
1934 Act. For purposes of the Warrants, in determining the number of outstanding
shares of Common Stock the Holder may acquire upon the exercise of the Warrants
without exceeding the Maximum Percentage, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company’s most recent
Annual Report on Form 10-K, Quarterly Report on Form 10-Q and Current Reports on
Form 8-K or other public filing with the Securities and Exchange Commission (the
“SEC”), as the case may be, (y) a more recent public announcement by the Company
or (z) any other written notice by the Company or the Transfer Agent setting
forth the number of shares of Common Stock outstanding (the “Reported
Outstanding Share Number”). If the Company receives an Exercise Notice from the
Holder at a time when the actual number of outstanding shares of Common Stock is
less than the Reported Outstanding Share Number, the Company shall (i) notify
the Holder in writing of the number of shares of Common Stock then outstanding
and, to the extent that such Exercise Notice would otherwise cause the Holder’s
beneficial ownership, as determined pursuant to this Section 3.3.10, to exceed
the Maximum Percentage, the Holder must notify the Company of a reduced number
of Warrant Shares to be purchased pursuant to such Exercise Notice (the number
of shares by which such purchase is reduced, the “Reduction Shares”) and (ii) as
soon as reasonably practicable, the Company shall return to the Holder any
exercise price paid by the Holder for the Reduction Shares. For any reason at
any time, upon the written or oral request of the Holder, the Company shall
within one (1) Business Day confirm orally and in writing or by electronic mail
to the Holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including the Warrants, by the Holder and any other Attribution Party since the
date as of which the Reported Outstanding Share Number was reported. In the
event that the issuance of Common Stock to the Holder upon exercise of the
Warrants results in the Holder and the other Attribution Parties being deemed to
beneficially own, in the aggregate, more than the Maximum Percentage of the
number of outstanding shares of Common Stock (as determined under
Section 13(d) of the 1934 Act), the number of shares so issued by which the
Holder’s and the other Attribution Parties’ aggregate beneficial ownership
exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and
void and shall be cancelled ab initio, and the Holder shall not have the power
to vote or to transfer the Excess Shares. As soon as reasonably practicable
after the issuance of the Excess Shares has been deemed null and void, the
Company shall return to the Holder the exercise price paid by the Holder for the
Excess Shares. Upon delivery of a written notice to the Company, the Holder may
from time to time increase or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% as specified in such notice; provided that
(i) any such increase in the Maximum Percentage will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company and
(ii) any such increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of Warrants that is not an
Attribution Party of the Holder. For purposes of clarity, the shares of Common
Stock issuable pursuant to the terms of the Warrants in excess of the Maximum
Percentage shall not be deemed to be beneficially owned by the Holder for any
purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934
Act. No prior inability to exercise the Warrants pursuant to this paragraph
shall have any effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of exercisability. The provisions
of this paragraph shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this Section 3.3.10 to the extent
necessary to correct this paragraph or any portion of this paragraph which may
be defective or inconsistent with the intended beneficial ownership limitation
contained in this Section 3.3.10 or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The limitation contained
in this paragraph may not be waived and shall apply to a successor holder of the
Warrants.

 

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3.4       Company’s Failure to Timely Deliver Securities. If either (I) the
Company shall fail for any reason or for no reason on or prior to the applicable
Share Delivery Date, if (x) the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, to issue to the Holder by book-entry
credit the number of shares of Common Stock to which the Holder is entitled and
register such Common Stock on the Company’s share register or (y) the Transfer
Agent is participating in the DTC Fast Automated Securities Transfer Program, to
credit the Holder’s balance account with DTC, for such number of shares of
Common Stock to which the Holder is entitled upon the Holder’s exercise of the
Warrants or (II) a registration statement (which may be the Registration
Statement) covering the issuance or resale of the Warrant Shares that are the
subject of the Exercise Notice (the “Exercise Notice Warrant Shares”) is not
available for the issuance or resale, as applicable, of such Exercise Notice
Warrant Shares and (x) the Company fails to promptly, but in no event later than
one (1) Business Day after such registration statement becomes unavailable, to
so notify the Holder and (y) the Company is unable to deliver the Exercise
Notice Warrant Shares electronically without any restrictive legend by crediting
such aggregate number of Exercise Notice Warrant Shares to the Holder’s or its
designee’s balance account with DTC through its Deposit / Withdrawal At
Custodian system (the event described in the immediately foregoing clause
(II) is hereinafter referred to as a “Notice Failure” and, together with the
event described in clause (I) above, an “Exercise Failure”), then, in addition
to all other remedies available to the Holder, if on or prior to the applicable
Share Delivery Date either (I) if the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, the Company shall fail to issue
by book-entry credit to the Holder and register such shares of Common Stock on
the Company’s share register or, if the Transfer Agent is participating in the
DTC Fast Automated Securities Transfer Program, credit the Holder’s balance
account with DTC for the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise hereunder or pursuant to the Company’s
obligation pursuant to clause (ii) below or (II) a Notice Failure occurs, and if
on or after such Trading Day the Holder is required by its broker to purchase
(in an open market transaction or otherwise) or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale
by the Holder of the Warrant Shares that the Holder anticipated receiving upon
such exercise from the Company (a “Buy-In”), then the Company shall (A) pay in
cash to the Holder the amount, if any, by which (x) the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any)
for the shares of Common Stock so purchased exceeds (y) amount obtained by
multiplying (1) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein shall limit a Holder’s 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 Company’s failure to timely credit by book
entry the Warrant Shares (or to electronically deliver such Warrant Shares) upon
the exercise of the Warrants as required pursuant to the terms hereof. While the
Warrants are outstanding, the Company shall cause its transfer agent to
participate in the DTC Fast Automated Securities Transfer Program. In addition
to the foregoing rights, (i) if the Company fails to deliver the applicable
number of Warrant Shares upon an exercise pursuant to Section 1 by the
applicable Share Delivery Date, then the Holder shall have the right to rescind
such exercise in whole or in part and retain and/or have the Company return, as
the case may be, any portion of the Warrants that has not been exercised
pursuant to such Exercise Notice; provided that the rescission of an exercise
shall not affect the Company’s obligation to make any payments that have accrued
prior to the date of such notice pursuant to this Section 3.4 or otherwise, and
(ii) if a registration statement (which may be the Registration Statement)
covering the issuance or resale of the Warrant Shares that are subject to an
Exercise Notice is not available for the issuance or resale, as applicable, of
such Exercise Notice Warrant Shares and the Holder has submitted an Exercise
Notice prior to receiving notice of the non-availability of such registration
statement and the Company has not already delivered the Warrant Shares
underlying such Exercise Notice electronically without any restrictive legend by
crediting such aggregate number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the Holder’s or its designee’s balance
account with DTC through its Deposit / Withdrawal At Custodian system, the
Holder shall have the option, by delivery of notice to the Company, to
(x) rescind such Exercise Notice in whole or in part and retain or have
returned, as the case may be, any portion of the Warrants that has not been
exercised pursuant to such Exercise Notice; provided that the rescission of an
Exercise Notice shall not affect the Company’s obligation to make any payments
that have accrued prior to the date of such notice pursuant to this Section 3.4
or otherwise, and/or (y) switch some or all of such Exercise Notice from a cash
exercise to a Cashless Exercise.

 

 12 

 

 

3.5       Cost Basis Information. (a) In the event of a cash exercise, the
Company hereby instructs the Warrant Agent to record cost basis for newly issued
shares in a manner to be subsequently communicated by the Company in writing to
the Warrant Agent.

 

(b)       In the event of a cashless exercise, the Company shall provide cost
basis for shares issued pursuant to a cashless exercise at the time the Company
confirms the number of Warrant Shares issuable in connection with the cashless
exercise to the Warrant Agent pursuant to Section 3.3.3 hereof.

 

3.6       Rule 144. (a) If the Warrant Shares are issued in a cashless exercise,
the Company and the registered holder undertaking such cashless exercise
acknowledge and agree that in accordance with Section 3(a)(9) of the 1933 Act,
other than a change in law, the Warrant Shares take on the registered
characteristics of the Warrants being exercised. For purposes of
Rule 144(d) promulgated under the 1933 Act, as in effect on the Issuance Date,
it is intended that the Warrant Shares issued in a cashless exercise shall be
deemed to have been acquired by the holder of the Warrant Shares, and the
holding period for the Warrant Shares shall be deemed to have commenced, on the
date the Warrants being exercised were originally issued pursuant to the
Underwriting Agreement.

 

 13 

 

 

(b)       The Company shall, at all times prior to the earlier to occur of
(i) the date of sale or other disposition by the holders of a Warrant of or all
shares of Common Stock issued on exercise of such Warrant or (ii) the expiration
or earlier termination of a Warrant if a Warrant has not been exercised in full
or in part on such date, use commercially reasonable efforts to timely file all
reports required under the 1934 Act and otherwise timely take all actions
necessary to permit the holder of such Warrant and/or the shares of Common Stock
issued on exercise thereof to sell or otherwise dispose of such Warrant and
shares pursuant to Rule 144 promulgated under the 1933 Act, provided that the
foregoing shall not apply in the event of a Merger Event following which the
successor or surviving entity is not subject to the reporting requirements of
the 1934 Act. If the holder of a Warrant proposes to sell Common Stock issuable
upon the exercise of such Warrant in compliance with Rule 144, then, upon the
holder of the Warrant’s written request to the Company, the Company shall
furnish to the holder of the Warrant, within five (5) Business Days after
receipt of such request, a written statement confirming the Company’s compliance
with the filing and other requirements of such Rule 144.

 

4.         Adjustments.

 

4.1       Adjustment Upon Issuance of Common Stock. If and whenever on or after
the Subscription Date, the Company issues or sells, or in accordance with this
Section 4.1 is deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or held by or
for the account of the Company, but excluding shares of Common Stock deemed to
have been issued or sold by the Company in connection with any Excluded
Securities) for a consideration per share (the “New Issuance Price”) less than a
price (the “Applicable Price”) equal to the Exercise Price in effect immediately
prior to such issuance or sale or deemed issuance or sale (the foregoing a
“Dilutive Issuance”), then immediately after such Dilutive Issuance, the
Exercise Price then in effect shall be reduced to an amount equal to the New
Issuance Price. For purposes of determining the adjusted Exercise Price under
this Section 4.1, the following shall be applicable:

 

(i)       Issuance of Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Options or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of any such
Options is less than the Applicable Price, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at
the time of the granting or sale of such Options for such price per share. For
purposes of this Section 4.1(i), the “lowest price per share for which one share
of Common Stock is issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Options” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one share of Common Stock upon the granting or sale of the Options, upon
exercise of the Options and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Options less any
consideration paid or payable by the Company with respect to such one share of
Common Stock upon the granting or sale of such Options, upon exercise of such
Options and upon conversion exercise or exchange of any Convertible Security
issuable upon exercise of such Options. No further adjustment of the Exercise
Price shall be made upon the actual issuance of such shares of Common Stock or
of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such shares of Common Stock upon conversion, exercise or
exchange of such Convertible Securities.

 

 14 

 

 

(ii)       Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the lowest price per share for
which one share of Common Stock is issuable upon the conversion, exercise or
exchange thereof is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible Securities for
such price per share. For the purposes of this Section 4.1(ii), the “lowest
price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof” shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the Company
with respect to any one share of Common Stock upon the issuance or sale of the
Convertible Security and upon conversion, exercise or exchange of such
Convertible Security less any consideration paid or payable by the Company with
respect to such one share of Common Stock upon the issuance or sale of such
Convertible Security and upon conversion, exercise or exchange of such
Convertible Security. No further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities, and if any such issuance or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustment of the Exercise Price has been or is to be made pursuant to
other provisions of this Section 4.1, no further adjustment of the Exercise
Price shall be made by reason of such issuance or sale.

 

(iii)       Change in Option Price or Rate of Conversion. If the purchase price
provided for in any Options, the additional consideration, if any, payable upon
the issue, conversion, exercise or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are convertible into or exercisable
or exchangeable for shares of Common Stock increases or decreases at any time
pursuant to the terms of such Options or Convertible Securities, the Exercise
Price in effect at the time of such increase or decrease shall be adjusted to
the Exercise Price that would have been in effect at such time had such Options
or Convertible Securities provided for such increased or decreased purchase
price, additional consideration or increased or decreased conversion rate, as
the case may be, at the time initially granted, issued or sold. For purposes of
this Section 4.1(iii), if the terms of any Option or Convertible Security that
was outstanding as of the Subscription Date are increased or decreased in the
manner described in the immediately preceding sentence, then such Option or
Convertible Security and the shares of Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have been issued as
of the date of such increase or decrease. No adjustment pursuant to this
Section 4.1(a) shall be made if such adjustment would result in an increase of
the Exercise Price then in effect. For the avoidance of doubt, no adjustment in
the Exercise Price shall be made pursuant to this Section 4.1(iii) as a result
of any modification of the terms of any Options or Convertible Securities after
their date of issuance.

 

 15 

 

  

(iv)       Calculation of Consideration Received. In case any Option is issued
in connection with the issuance or sale of other securities of the Company,
together comprising one integrated transaction, (x) the Options will be deemed
to have been issued for the Option Value of such Options and (y) the other
securities issued or sold in such integrated transaction shall be deemed to have
been issued or sold for the difference of (I) the aggregate consideration
received by the Company less any consideration paid or payable by the Company
pursuant to the terms of such other securities of the Company, less (II) the
Option Value of such Options; provided, that if the value determined pursuant to
clause (y) above would result in a value less than the par value of the Common
Stock, then the other securities issued or sold in such integrated transaction
shall be deemed to have been issued or sold for the par value of the Common
Stock. If any shares of Common Stock, Options or Convertible Securities are
issued or sold or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount received by the Company
therefor. If any shares of Common Stock, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of such
consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of publicly traded
securities, in which case the amount of consideration received by the Company
will be the Closing Sale Price of such publicly traded securities on the date of
receipt of such publicly traded securities. If any shares of Common Stock,
Options or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor will be deemed to be the fair value
of such portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible Securities,
as the case may be. The fair value of any consideration other than cash or
publicly traded securities will be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement within ten
(10) days after the occurrence of an event requiring valuation (the “Valuation
Event”), the fair value of such consideration will be determined within five
(5) Business Days after the tenth (10th) day following the Valuation Event by an
independent, reputable appraiser jointly selected by the Company and the
Required Holders. The determination of such appraiser shall be final and binding
upon all parties absent manifest error and the fees and expenses of such
appraiser shall be borne by the Company.

 

(v)       Record Date. If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (A) to receive a dividend or other
distribution payable in shares of Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase shares of Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issuance 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.

 

(vi)       No Modification. So long as any of the Warrants are outstanding, the
Company shall not amend, modify or change the terms of any Options or
Convertible Securities (whether issued on, prior or after the Subscription Date)
to lower the exercise price or conversion price thereof.

 

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4.2       Adjustment upon Subdivision or Combination of Common Stock. If the
Company at any time on or after the Issuance Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased. If
the Company at any time on or after the Issuance Date combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any adjustment under
this Section 4.2 shall become effective at the close of business on the date the
subdivision or combination becomes effective.

 

4.3       Purchase Rights. In addition to any adjustments pursuant to
Section 4.1 above, if at any time on or after the Issuance Date and on or prior
to the Expiration Date the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
“Purchase Rights”), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights that the
Holder could have acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete exercise of the Warrants (without regard to any
limitations or restrictions on exercise of the Warrants, including without
limitation, the Maximum Percentage) immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of Common Stock
are to be determined for the grant, issuance or sale of such Purchase Rights
(provided, however, that to the extent that the Holder’s right to participate in
any such Purchase Right would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (and shall not be entitled
to beneficial ownership of such Common Stock as a result of such Purchase Right
(and beneficial ownership) to such extent) and such Purchase Right to such
extent shall be held in abeyance for the benefit of the Holder until such time
or times as its right thereto would not result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, at which time or times the
Holder shall be granted such right (and any Purchase Right granted, issued or
sold on such initial Purchase Right or on any subsequent Purchase Right to be
held similarly in abeyance) to the same extent as if there had been no such
limitation).

 

4.4       Rights upon Distribution of Assets. In addition to any adjustments
pursuant to Section 4.1 above, if, on or after the Issuance Date and on or prior
to the Expiration Date, the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of the Warrants, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of the Warrants (without regard
to any limitations or restrictions on exercise of the Warrants, including
without limitation, the Maximum Percentage) immediately before the date on which
a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be
determined for the participation in such Distribution (provided, however, that
to the extent that the Holder’s right to participate in any such Distribution
would result in the Holder and the other Attribution Parties exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to such extent (and shall not be entitled to beneficial ownership
of such shares of Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time or times as its right
thereto would not result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, at which time or times the Holder shall be
granted such Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held similarly in
abeyance) to the same extent as if there had been no such limitation).

 

 17 

 

 

4.5       Fundamental Transaction. The Company shall not enter into or be party
to a Fundamental Transaction unless the Successor Entity assumes in writing all
of the obligations of the Company under the Warrants in accordance with the
provisions of this Section 4.5, including agreements to deliver to the Holder in
exchange for the Warrants a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to the Warrants,
including, without limitation, that is exercisable for a corresponding number of
shares of capital stock equivalent to the shares of Common Stock acquirable and
receivable upon exercise of the Warrants (without regard to any limitations on
the exercise of the Warrants) prior to such Fundamental Transaction, and with an
exercise price that applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such adjustments to the number of shares of capital
stock and such exercise price being for the purpose of protecting the economic
value of the Warrants immediately prior to the consummation of such Fundamental
Transaction). Upon the consummation of each Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for the Company (so that
from and after the date of the applicable Fundamental Transaction, the
provisions of the Warrants and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations of the
Company under the Warrants with the same effect as if such Successor Entity had
been named as the Company herein. Upon consummation of each Fundamental
Transaction, the Successor Entity shall deliver to the Holder confirmation that
there shall be issued upon exercise of the Warrants at any time after the
consummation of the applicable Fundamental Transaction, in lieu of the shares of
Common Stock (or other securities, cash, assets or other property (except such
items still issuable under Sections 4.3 and 4.4 above, which shall continue to
be receivable thereafter)) issuable upon the exercise of the Warrants prior to
the applicable Fundamental Transaction, such shares of common stock (or its
equivalent) of the Successor Entity (including its Parent Entity) that the
Holder would have been entitled to receive upon the happening of the applicable
Fundamental Transaction had the Warrants been exercised immediately prior to the
applicable Fundamental Transaction (without regard to any limitations on the
exercise of the Warrants), as adjusted in accordance with the provisions of the
Warrants. Notwithstanding the foregoing, and without limiting Section 3.3.10
hereof, the Holder may elect, at its sole option, by delivery of written notice
to the Company to waive this Section 4.4 to permit the Fundamental Transaction
without the assumption of the Warrants. In addition to and not in substitution
for any other rights hereunder, prior to the consummation of each Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities or other assets with respect to or in exchange for shares of
Common Stock (a “Corporate Event”), the Company shall make appropriate provision
to insure that the Holder will thereafter have the right to receive upon an
exercise of the Warrants at any time after the consummation of the applicable
Fundamental Transaction but prior to the Expiration Date, in lieu of the shares
of the Common Stock (or other securities, cash, assets or other property (except
such items still issuable under Sections 4.3 and 4.4 above, which shall continue
to be receivable thereafter)) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of stock, securities, cash, assets or
any other property whatsoever (including warrants or other purchase or
subscription rights) (collectively, the “Corporate Event Consideration”) that
the Holder would have been entitled to receive upon the happening of the
applicable Fundamental Transaction had the Warrants been exercised immediately
prior to the applicable Fundamental Transaction (without regard to any
limitations on the exercise of the Warrants). The provision made pursuant to the
preceding sentence shall be in a form and substance reasonably satisfactory to
the Holder. The provisions of this Section 4.5 shall apply similarly and equally
to successive Fundamental Transactions and Corporate Events. Notwithstanding the
foregoing, in the event of a Change of Control at the request of the Holder
delivered before the 30th day after such Change of Control, the Company (or the
Successor Entity) shall purchase this Warrant from the Holder by paying to the
Holder, within five (5) Business Days after such request (or, if later, on the
effective date of the Change of Control), an amount equal to the Black Scholes
Value of the remaining unexercised portion of this Warrant on the effective date
of such Change of Control, payable in cash; provided, however, that, if the
Change of Control is not within the Company’s control, including not approved by
the Company’s Board of Directors), the Holder shall only be entitled to receive
from the Company or any Successor Entity, as of the date of consummation of such
Change of Control, the same type or form of consideration (and in the same
proportion), at the Black Scholes Value of the unexercised portion of the
Warrants, that is being offered and paid to the holders of Common Stock of the
Company in connection with the Change of Control, whether that consideration be
in the form of cash, stock or any combination thereof, or whether the holders of
Common Stock are given the choice to receive from among alternative forms of
consideration in connection with the Change of Control.

 

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4.6       Voluntary Adjustment by the Company. The Company may at any time
during the term of the Warrants reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

 

4.7       Notices.

 

4.7.1       Adjustment to Exercise Price. Whenever the Exercise Price is
adjusted pursuant to any provision of this Section 4, the Company shall give
prompt written notice thereof to the Warrant Agent, which notice shall set forth
the Exercise Price after such adjustment and set forth a brief statement of the
facts requiring such adjustment. The Company agrees that it will provide the
Warrant Agent with any new or amended exercise terms. The Warrant Agent shall
have no obligation under any Section of this Warrant Agreement to determine
whether an adjustment made hereunder has occurred or are scheduled or
contemplated to occur or to calculate any of the adjustments set forth in this
Warrant Agreement.

 

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4.7.2       Notices of Certain Events to Allow Exercise. If (A) the Company
shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which
the Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
mailed to each registered holder at its last address as it shall appear upon the
Warrant Register of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. To the extent that any notice provided hereunder constitutes, or
contains, material, non-public information regarding the Company or any of the
subsidiaries, the Company shall simultaneously file such notice with the
Commission pursuant to a Current Report on Form 8-K. The registered holder shall
remain entitled to exercise a Warrant during the period commencing on the date
of such notice to the effective date of the event triggering such notice except
as may otherwise be expressly set forth herein.

 

4.8       Form of Warrant. The respective forms of the Five-Year Warrant and the
15-Month Warrant need not be changed because of any adjustment pursuant to this
Section 4, and Warrants issued after such adjustment may state the same Warrant
Price and the same number of shares as is stated in the applicable Warrants
initially issued pursuant to this Warrant Agreement.

 

4.9       Calculations. All calculations under this Section 4 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 4, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the number of
shares of Common Stock (excluding treasury shares, if any) issued and
outstanding.

 

5.         Transfer and Exchange of Warrants.

 

5.1       Registration of Transfer. The Warrant Agent shall register the
transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, duly endorsed with
signatures properly guaranteed and accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant of the same class representing
an equal aggregate number of Warrants shall be issued and the old Warrant shall
be cancelled by the Warrant Agent. The Warrants so cancelled shall be delivered
by the Warrant Agent to the Company from time to time upon the request and at
the expense of the Company.

 

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5.2       Procedure for Surrender of Warrants. Warrants may be surrendered to
the Warrant Agent, together with a written request for exchange or transfer, and
thereupon the Warrant Agent shall issue in exchange therefor one or more new
Warrants of the same class as requested by the registered holder of the Warrants
so surrendered, representing an equal aggregate number of Warrants; provided,
however, that except as otherwise provided herein or in any Book-Entry Warrant
Certificate, each Book-Entry Warrant Certificate may be transferred only in
whole and only to the Depository, to another nominee of the Depository, to a
successor depository, or to a nominee of a successor depository; provided
further, however, that in the event that a Warrant surrendered for transfer
bears a restrictive legend, the Warrant Agent shall not cancel such Warrant and
issue new Warrants in exchange therefor until the Warrant Agent has received an
opinion of counsel for the Company stating that such transfer may be made and
indicating whether the new Warrants or Warrant Shares must also bear a
restrictive legend. Upon any such registration of transfer, the Company shall
execute, and the Warrant Agent shall countersign and deliver, in the name of the
designated transferee a new Warrant Certificate or Warrant Certificates of any
authorized denomination evidencing in the aggregate a like number of unexercised
Warrants.

 

A party requesting transfer of Warrants must provide any evidence of authority
that may be required by the Warrant Agent, including but not limited to, a
signature guarantee from an eligible guarantor institution participating in a
signature guarantee program approved by the Securities Transfer Association.

 

5.3       Fractional Warrants. The Warrant Agent shall not be required to effect
any registration of transfer or exchange that will result in the issuance of a
warrant certificate for a fraction of a warrant.

 

5.4       Service Charges. A registered holder shall not incur any service
charge for any exchange or registration of transfer of Warrants.

 

5.5       Warrant Execution and Countersignature. The Warrant Agent is hereby
authorized to countersign and to deliver, in accordance with the terms of this
Warrant Agreement, the Warrants required to be issued pursuant to the provisions
of this Section 5, and the Company, whenever required by the Warrant Agent, will
supply the Warrant Agent with Warrants duly executed on behalf of the Company
for such purpose.

 

6.         Other Provisions Relating to Rights of Registered Holders of
Warrants.

 

6.1       No Rights as Stockholder. Except as otherwise specifically provided
herein, a registered holder, solely in its capacity as a holder of a 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 Agreement be construed to confer upon a registered holder, solely
in its capacity as the registered holder of a 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, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the registered holder of the Warrant Shares that it is then entitled
to receive upon the due exercise of a Warrant. In addition, nothing contained in
this Warrant Agreement shall be construed as imposing any liabilities on a
registered holder to purchase any securities (upon exercise of a Warrant or
otherwise) or as a stockholder of the Company, whether such liabilities are
asserted by the Company or by creditors of the Company. A Warrant does not
entitle the registered holder thereof to any of the rights of a stockholder.

 

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6.2       Lost, Stolen or Destroyed Warrants. The Warrant Agent shall issue
replacement Warrants in a form mutually agreed to by Warrant Agent and the
Company for those certificates alleged to have been lost, stolen or destroyed,
upon receipt by Warrant Agent of an open penalty surety bond satisfactory to it
and holding it and Company harmless and, at the Company’s or the Rights Agent’s
request, reimbursement to the Company and the Warrant Agent of all reasonable
expenses incidental thereto, absent notice to Warrant Agent that such
certificates have been acquired by a bona fide purchaser. Warrant Agent may, at
its option, issue replacement Warrants for mutilated certificates upon
presentation thereof without such indemnity.

 

6.3       Authorized Shares. The Company covenants that, during the period the
Warrants are outstanding, the Company shall at all times keep reserved for
issuance under the Warrants a number of shares of Common Stock at least equal to
100% of the maximum number of shares of Common Stock as shall be necessary to
satisfy the Company’s obligation to issue shares of Common Stock under the
Warrants then outstanding (without regard to any limitations on exercise) (the
“Required Reserve Amount”); provided that at no time shall the number of shares
of Common Stock reserved pursuant to this Section 6.3 be reduced other than in
connection with any exercise of Warrants or such other event covered by
Section 4.2.  The Required Reserve Amount (including, without limitation, each
increase in the number of shares so reserved) shall be allocated pro rata among
the holders of the Warrants based on the number of shares of Common Stock
issuable upon exercise of Warrants held by each holder thereof on the Issuance
Date (without regard to any limitations on exercise) (the “Authorized Share
Allocation”). In the event that a holder shall sell or otherwise transfer any of
such holder’s Warrants, each transferee shall be allocated a pro rata portion of
such holder’s Authorized Share Allocation. Any shares of Common Stock reserved
and allocated to any Person that ceases to hold any Warrants shall be allocated
to the remaining holders of Warrants, pro rata based on the number of shares of
Common Stock issuable upon exercise of the Warrants then held by such holders
thereof (without regard to any limitations on exercise). If at any time while
the Warrants remains outstanding the Company does not have a sufficient number
of authorized and unreserved shares of Common Stock to satisfy its obligation to
reserve for issuance the Required Reserve Amount (an “Authorized Share
Failure”), then the Company shall promptly take all action reasonably necessary
to increase the Company’s authorized shares of Common Stock to an amount
sufficient to allow the Company to reserve the Required Reserve Amount for the
Warrants then outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an
Authorized Share Failure, but in no event later than ninety (90) days after the
occurrence of such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in the number of authorized
shares of Common Stock. In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its reasonable
best efforts to solicit its stockholders’ approval of such increase in
authorized shares of Common Stock and to cause its board of directors to
recommend to the stockholders that they approve such proposal. Notwithstanding
the foregoing, if any such time of an Authorized Share Failure, the Company is
able to obtain the written consent of a majority of the shares of its issued and
outstanding shares of Common Stock to approve the increase in the number of
authorized shares of Common Stock, the Company may satisfy this obligation by
obtaining such consent and submitting for filing with the SEC an Information
Statement on Schedule 14C.

 

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6.4       Noncircumvention. The Company hereby covenants and agrees that the
Company will not, by amendment of its Certificate of Incorporation or Bylaws, or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, dissolution, issuance or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of the Warrants, and will at all times in good faith carry out all of the
provisions of the Warrants and take all action as may be required to protect the
rights of the Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of Common Stock
receivable upon the exercise of the Warrants above the Exercise Price then in
effect, (ii) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of the Warrants, and
(iii) shall, so long as any of the Warrants are outstanding, take all action
necessary to reserve and keep available out of its authorized and unissued
shares of Common Stock, solely for the purpose of effecting the exercise of the
Warrants, the number of shares of Common Stock as shall from time to time be
necessary to effect the exercise of the Warrants then outstanding (without
regard to any limitations on exercise).

 

7.         Concerning the Warrant Agent and Other Matters.

 

7.1       Payment of Taxes. The Company will from time to time promptly pay all
taxes and charges that may be imposed upon the Company or the Warrant Agent in
respect of the issuance, transfer or delivery of shares of Common Stock upon the
exercise of Warrants, but the Company or the Warrant Agent shall not be
obligated to pay any transfer taxes or charges in respect of the Warrants or
such shares in connection with a transfer to a different holder. The Warrant
Agent shall not register any transfer or issue or deliver any Warrant
Certificate(s) unless or until the persons requesting the registration or
issuance shall have paid to the Warrant Agent for the account of the Company the
amount of such transfer tax and charges, if any, or shall have established to
the reasonable satisfaction of the Company and the Warrant Agent that such
transfer tax and charges, if any, have been paid.

 

7.2       Resignation, Consolidation, or Merger of Warrant Agent.

 

7.2.1       Appointment of Successor Warrant Agent. The Warrant Agent, or any
successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving thirty (30) days’
notice in writing to the Company pursuant to the notice provisions in
Section 8.2 hereof. In the event the transfer agency relationship, if any, in
effect between the Company and the Warrant Agent terminates, the Warrant Agent
will be deemed to have resigned automatically and be discharged from its duties
under this Warrant Agreement as of the effective date of such termination. If
the office of the Warrant Agent becomes vacant by resignation or incapacity to
act or otherwise, the Company shall appoint in writing a successor Warrant Agent
in place of the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been notified in writing of
such resignation or incapacity by the Warrant Agent or by the holder of the
Warrant (who shall, with such notice, submit his Warrant for inspection by the
Company), then the holder of any Warrant may apply to the Supreme Court of the
State of New York for the County of New York for the appointment of a successor
Warrant Agent at the Company’s cost. Any successor Warrant Agent, whether
appointed by the Company or by such court, shall be authorized under applicable
laws to exercise the powers of a transfer agent and subject to supervision or
examination by federal or state authorities. After appointment, any successor
Warrant Agent shall be vested with all the authority, powers, rights,
immunities, duties, and obligations of its predecessor Warrant Agent with like
effect as if originally named as Warrant Agent hereunder, without any further
act or deed; but if for any reason it becomes necessary or appropriate, the
predecessor Warrant Agent shall execute and deliver, at the expense of the
Company, an instrument transferring to such successor Warrant Agent all the
authority, powers, and rights of such predecessor Warrant Agent hereunder; and
upon request of any successor Warrant Agent the Company shall make, execute,
acknowledge, and deliver any and all instruments in writing for more fully and
effectually vesting in and confirming to such successor Warrant Agent all such
authority, powers, rights, immunities, duties, and obligations.

 

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7.2.2       Notice of Successor Warrant Agent. In the event a successor Warrant
Agent shall be appointed, the Company shall give notice thereof to the
predecessor Warrant Agent and the transfer agent for the Common Stock not later
than the effective date of any such appointment.

 

7.2.3       Merger or Consolidation of Warrant Agent. Any Person into which the
Warrant Agent may be merged or converted or with which it may be consolidated or
any Person resulting from any merger, conversion, or consolidation to which the
Warrant Agent shall be a party, or any Person succeeding to the business of the
Warrant Agent, shall be the successor Warrant Agent under this Warrant Agreement
without any further act by the parties.

 

7.3       Fees and Expenses of Warrant Agent.

 

7.3.1       Remuneration. The Company agrees to pay the Warrant Agent reasonable
remuneration for its services as such Warrant Agent hereunder in accordance with
a fee schedule to be mutually agreed upon and will reimburse the Warrant Agent
upon demand for all expenditures (including the reasonable expenses and fees of
counsel) and disbursements that the Warrant Agent may reasonably incur in the
incurred in the preparation, delivery, negotiation, amendment, administration
and execution of this Warrant Agreement and the exercise and performance of its
duties hereunder.

 

7.3.2       Further Assurances. The Company shall perform, acknowledge and
deliver or cause to be performed, acknowledged and delivered all such further
and other acts, documents, instruments and assurances as may be reasonably
required by the Warrant Agent for the carrying out or performing by the Warrant
Agent of the provisions of this Warrant Agreement.

 

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7.4       Liability of Warrant Agent.

 

7.4.1       Reliance on Company Statement. Whenever in the performance of its
duties under this Warrant Agreement, the Warrant Agent shall deem it necessary
or desirable that any fact or matter be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a statement signed by the
Chief Executive Officer, Chief Financial Officer, President or Chairman of the
Board of Directors of the Company and delivered to the Warrant Agent. The
Warrant Agent may rely upon, and be held harmless for such reliance, such
statement for any action taken or suffered by it pursuant to the provisions of
this Warrant Agreement, and shall not be held liable in connection with any
delay in receiving such statement.

 

7.4.2       Indemnification. The Company covenants and agrees to indemnify and
to hold the Warrant Agent harmless against any costs, expenses (including
reasonable fees of its legal counsel), losses or damages, which may be paid,
incurred or suffered by or to which it may become subject, arising from or out
of, directly or indirectly, any claims or liability resulting from its actions
or omissions as Warrant Agent pursuant hereto; provided, that such covenant and
agreement does not extend to, and the Warrant Agent shall not be indemnified
with respect to, such costs, expenses, losses and damages incurred or suffered
by the Warrant Agent as a result of, or arising out of, its gross negligence,
bad faith, or willful misconduct (each as determined in a final, non-appealable
judgment of a court of competent jurisdiction).

 

7.4.3       Instructions. From time to time, the Company may provide the Warrant
Agent with instructions concerning the services performed by the Warrant Agent
hereunder. In addition, at any time the Warrant Agent may apply to any officer
of the Company for instruction, and may consult with legal counsel for Warrant
Agent or the Company with respect to any matter arising in connection with the
services to be performed by the Warrant Agent under this Warrant Agreement. The
Warrant Agent and its agents and subcontractors shall not be liable and shall be
indemnified by the Company for any action taken or omitted by the Warrant Agent
in reliance upon any Company instructions or upon the advice or opinion of such
counsel. The Warrant Agent shall not be held to have notice of any change of
authority of any person, until receipt of written notice thereof from the
Company.

 

7.4.4       Exclusions. The Warrant Agent shall have no responsibility with
respect to the validity of this Warrant Agreement or with respect to the
validity or execution of any Warrant (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Warrant Agreement or in any Warrant; nor shall it be
responsible to make calculations under Section 3.3.8 or any adjustments required
under the provisions of Section 4 hereof or responsible for the manner, method,
or amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment; nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock to be issued pursuant to this Warrant
Agreement or any Warrant or as to whether any shares of Common Stock will when
issued be valid and fully paid and nonassessable.

 

 25 

 

 

7.4.5       Rights and Duties of Warrant Agent. (a) The Warrant Agent may
consult with legal counsel (who may be legal counsel for the Company), and the
opinion or advice of such counsel shall be full and complete authorization and
protection to the Warrant Agent as to any action taken or omitted by it in
accordance with such opinion or advice.

 

(b)       The Warrant Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Warrant Agreement or in the
Warrant Certificates (except its countersignature thereof) or be required to
verify the same, and all such statements and recitals are and shall be deemed to
have been made by the Company only.

 

(c)       The Warrant Agent shall not have any duty or responsibility in the
case of the receipt of any written demand from any holder of Warrants with
respect to any action or default by the Company, including, without limiting the
generality of the foregoing, any duty or responsibility to initiate or attempt
to initiate any proceedings at law or otherwise or to make any demand upon the
Company.

 

(d)       The Warrant Agent and any stockholder, director, officer or employee
of the Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant Agent
under this Warrant Agreement. Nothing herein shall preclude the Warrant Agent
from acting in any other capacity for the Company or for any other legal entity.

 

(e)       The Warrant Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorney or agents, and the Warrant Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorney or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence, bad faith or willful misconduct
(each as determined by a final judgment of a court of competent jurisdiction) in
the selection and continued employment thereof.

 

(f)       The Warrant Agent may rely on and shall be held harmless and protected
and shall incur no liability for or in respect of any action taken, suffered or
omitted to be taken by it in reliance upon any certificate, statement,
instrument, opinion, notice, letter, facsimile transmission, telegram or other
document, or any security delivered to it, and believed by it to be genuine and
to have been made or signed by the proper party or parties, or upon any written
or oral instructions or statements from the Company with respect to any matter
relating to its acting as Warrant Agent hereunder.

 

(g)       The Warrant Agent shall not be obligated to expend or risk its own
funds or to take any action that it believes would expose or subject it to
expense or liability or to a risk of incurring expense or liability, unless it
has been furnished with assurances of repayment or indemnity satisfactory to it.

 

 26 

 

 

(h)       The Warrant Agent shall not be liable or responsible for any failure
of the Company to comply with any of its obligations relating to any
registration statement filed with the Commission or this Warrant Agreement,
including without limitation obligations under applicable regulation or law.

 

(i)       The Warrant Agent shall not be accountable or under any duty or
responsibility for the use by the Company of any Warrants authenticated by the
Warrant Agent and delivered by it to the Company pursuant to this Warrant
Agreement or for the application by the Company of the proceeds of the issue and
sale, or exercise, of the Warrants.

 

(j)       The Warrant Agent shall act hereunder solely as agent for the Company,
and its duties shall be determined solely by the express provisions hereof (and
no duties or obligations shall be inferred or implied). The Warrant Agent shall
not assume any obligations or relationship of agency or trust with any of the
owners or holders of the Warrants.

 

(k)       The Warrant Agent may rely on and be fully authorized and protected in
acting or failing to act upon (a) any guaranty of signature by an “eligible
guarantor institution” that is a member or participant in the Securities
Transfer Agents Medallion Program or other comparable “signature guarantee
program” or insurance program in addition to, or in substitution for, the
foregoing; or (b) any law, act, regulation or any interpretation of the same
even though such law, act, or regulation may thereafter have been altered,
changed, amended or repealed.

 

(l)       In the event the Warrant Agent believes any ambiguity or uncertainty
exists hereunder or in any notice, instruction, direction, request or other
communication, paper or document received by the Warrant Agent hereunder, the
Warrant Agent, may, in its sole discretion, refrain from taking any action, and
shall be fully protected and shall not be liable in any way to Company, the
holder of any Warrant Certificate or Book-Entry Warrant Certificate or any other
person or entity for refraining from taking such action, unless the Warrant
Agent receives written instructions signed by the Company that eliminates such
ambiguity or uncertainty to the satisfaction of Warrant Agent. The foregoing
shall not eliminate any liability that the Company may have to any registered
holder or holder of any Warrant Certificate or Book-Entry Warrant Certificate.

 

7.5        Limitation on Liability of Warrant Agent. Notwithstanding anything
contained herein to the contrary, the Warrant Agent’s aggregate liability during
any term of this Warrant Agreement with respect to, arising from, or arising in
connection with this Warrant Agreement, or from all services provided or omitted
to be provided under this Warrant Agreement, whether in contract, or in tort, or
otherwise, is limited to, and shall not exceed, the amounts paid hereunder by
the Company to Warrant Agent as fees and charges, but not including reimbursable
expenses, during the twelve (12) months immediately preceding the event for
which recovery from Warrant Agent is being sought. Sections 7.1, 7.3, 7.4, 7.5
and 8.15 shall survive the expiration of the Warrants, the termination of this
Warrant Agreement and the resignation, replacement or removal of the Warrant
Agent. The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company.

 

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7.6        Acceptance of Agency. The Warrant Agent hereby accepts the agency
established by this Warrant Agreement and agrees to perform the same upon the
terms and conditions herein set forth and among other things, shall account
promptly to the Company with respect to Warrants exercised and concurrently
account for, and pay to the Company, all moneys received by the Warrant Agent
for the purchase of shares of Common Stock through the exercise of Warrants.

 

7.7        Opinion of Counsel. The Company shall provide an opinion of counsel
prior to the Issuance Date to set up a reserve of Warrants and related Common
Stock. The opinion shall state that all Warrants or Common Stock, as applicable,
are:

 

(1)       registered under the 1933 Act, or are exempt from such registration,
and all appropriate state securities law filings have been made with respect to
the warrants or shares; and

 

(2)       validly issued, fully paid and non-assessable.

 

8.          Miscellaneous Provisions.

 

8.1        Successors. Subject to applicable securities laws, this Warrant
Agreement and the Warrants and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors and permitted assigns
of the Company and the successors and permitted assigns of each registered
holder. The provisions of this Warrant Agreement are intended to be for the
benefit of any holder from time to time of this Warrant Agreement and shall be
enforceable by the holder or holder of Warrant Shares.

 

8.2        Notices. Any notice, statement or demand authorized by this Warrant
Agreement to be given or made by the Warrant Agent or by the holder of any
Warrant to or on the Company shall be in writing and delivered by hand or sent
by registered or certified mail or overnight courier service addressed (until
another address is filed in writing by the Company with the Warrant Agent), or
by facsimile transmission (as long as the sender maintains a fax delivery report
confirming receipt by the recipient and is considered delivered when sent or if
after normal business hours the next Business Day) or by email (as long as no
bounce back is received by the sender), as follows:

 

Outlook Therapeutics, Inc.
7 Clarke Drive
Cranbury, NJ 08512
Attn: Lawrence A. Kenyon

 

Any notice, statement or demand authorized by this Warrant Agreement to be given
or made by the holder of any Warrant or by the Company to or on the Warrant
Agent shall be in writing and delivered by hand or overnight courier service
addressed (until another address is filed in writing by the Warrant Agent with
the Company) as follows:

 

American Stock Transfer & Trust Company, LLC
6201 15th Avenue

Brooklyn, NY 11219
Attn: Reorg Department

 

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8.3        Jurisdiction. The validity, interpretation, and performance of this
Warrant Agreement and of the Warrants shall be governed in all respects by the
laws of the State of New York, without giving effect to conflicts of law
principles that would result in the application of the substantive laws of
another jurisdiction. The Company hereby agrees that any action, proceeding or
claim against it arising out of or relating in any way to this Warrant Agreement
shall be brought and enforced in the courts of the State of New York or the
United States District Court for the Southern District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
The Company hereby waives any objection to such exclusive jurisdiction and that
such courts represent an inconvenience forum. Any such process or summons to be
served upon the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 8.2 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the Company
in any action, proceeding or claim.

 

8.4        Persons Having Rights under this Warrant Agreement. Nothing in this
Warrant Agreement expressed and nothing that may be implied from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the parties hereto and the registered
holders of the Warrants, any right, remedy, or claim under or by reason of this
Warrant Agreement or of any covenant, condition, stipulation, promise, or
agreement hereof. All covenants, conditions, stipulations, promises, and
agreements contained in this Warrant Agreement shall be for the sole and
exclusive benefit of the parties hereto and their successors and assigns and of
the registered holders of the Warrants.

 

8.5        Examination of the Warrant Agreement. A copy of this Warrant
Agreement shall be available at all reasonable times at the office of the
Warrant Agent, for inspection by the registered holder of any Warrant. The
Warrant Agent may require any such holder to submit his Warrant for inspection
by it.

 

8.6        Counterparts. This Warrant Agreement may be executed in any number of
original or facsimile counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument. A signature to this Warrant
Agreement transmitted electronically shall have the same authority, effect, and
enforceability as an original signature.

 

8.7        Effect of Headings. The Section headings herein are for convenience
only and are not part of this Warrant Agreement and shall not affect the
interpretation thereof.

 

8.8        Amendments. All modifications or amendments, including any amendment
to increase the Warrant Price or shorten the applicable Exercise Period, shall
require the written consent of the registered holders of Warrants equal to at
least 67% of the Warrant Shares issuable upon exercise of all then outstanding
Warrants; provided, however, that any modification or amendment that applies
only to the Five-Year Warrants or the 15-Month Warrants, as the case may be,
shall require only the written consent of the registered holders of the
applicable Warrants equal to at least 67% of the Warrant Shares issuable upon
exercise of all then outstanding Warrants of the applicable class. As a
condition precedent to the Warrant Agent’s execution of any amendment, the
Company shall deliver to the Warrant Agent a certificate from an Authorized
Officer that states that the proposed amendment is in compliance with the terms
of this Section 8.8. No consideration shall be offered or paid to any person to
amend or consent to a waiver or modification of any provision of this Warrant
Agreement unless the same consideration is also offered to all holders of the
Warrants or, in the case of an amendment, waiver or modification that applies
only to the Five-Year Warrants or the 15-Month Warrants, as the case may be, all
holders of such Warrants. Notwithstanding anything in this Warrant Agreement to
the contrary, the Warrant Agent shall not be required to execute any supplement
or amendment to this Warrant Agreement that it has determined would adversely
affect its own rights, duties, obligations or immunities under this Warrant
Agreement. No supplement or amendment to this Warrant Agreement shall be
effective unless duly executed by the Warrant Agent.

 

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8.9         Severability. Wherever possible, each provision of this Warrant
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant Agreement; provided, however, that if such prohibited and invalid
provision shall adversely affect the rights, immunities, liabilities, duties or
obligations of the Warrant Agent, the Warrant Agent shall be entitled to resign
immediately upon written notice to the Company.

 

8.10       Restrictions. Each registered holder acknowledges that the Warrant
Shares acquired upon the exercise of a Warrant, if not registered, and the
registered holder does not utilize cashless exercise, will have restrictions
upon resale imposed by state and federal securities laws.

 

8.11       Nonwaiver and Expenses. No course of dealing or any delay or failure
to exercise any right hereunder on the part of a registered holder shall operate
as a waiver of such right or otherwise prejudice such a registered holder’s
rights, powers or remedies. Without limiting any other provision of this Warrant
Agreement or the Underwriting Agreement, if the Company willfully and knowingly
fails to comply with any provision of this Warrant Agreement or the Warrants,
which results in any material damages to a registered holder, the Company shall
pay such registered holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by the registered holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.

 

8.12       Limitation of Liability. No provision hereof, in the absence of any
affirmative action by the registered holder to exercise a Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of a
registered holder, shall give rise to any liability of each registered holder
for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.

 

8.13       Remedies. The registered holders, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Warrant
Agreement and hereby agrees to waive and not to assert the defense in any action
for specific performance that a remedy at law would be adequate.

 

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8.14       Confidentiality. The Warrant Agent and the Company agree that all
books, records, information and data pertaining to the business of the other
party, including inter alia, personal, non-public warrant holder information,
which are exchanged or received pursuant to the negotiation or the carrying out
of this Warrant Agreement including the fees for services set forth in a
mutually agreed upon schedule shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required by law,
including, without limitation, pursuant to subpoenas from state or federal
government authorities (e.g., in divorce and criminal actions).

 

8.15       Consequential Damages. Neither party to this Warrant Agreement shall
be liable to the other party for any consequential, indirect, special or
incidental damages under any provisions of this Warrant Agreement or for any
consequential, indirect, punitive, special or incidental damages arising out of
any act or failure to act hereunder even if that party has been advised of or
has foreseen the possibility of such damages.

 

8.16       Force Majeure. Notwithstanding anything to the contrary contained
herein, the Warrant Agent will not be liable for any delays or failures in
performance resulting from acts beyond its reasonable control including, without
limitation, acts of God, terrorist acts, shortage of supply, breakdowns or
malfunctions, interruptions or malfunction of computer facilities, or loss of
data due to power failures or mechanical difficulties with information storage
or retrieval systems, labor difficulties, war, or civil unrest.

 

9.          Certain Definitions. For purposes of this Warrant Agreement, the
following terms shall have the following meanings:

 

9.1        “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
“control” of a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

 

9.2        “Approved Stock Plan” means any employee benefit plan that has been
approved by a majority of the disinterested members of the Board of Directors of
the Company, pursuant to which the Company’s securities may be issued to any
employee, officer or director for services provided to the Company.

 

9.3        “Attribution Parties” means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Issuance Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company’s Common
Stock would or could be aggregated with the Holder’s and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.

 

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9.4        “Bid Price” means, for any security as of the particular time of
determination, the bid price for such security on the Principal Market as
reported by Bloomberg as of such time of determination, or, if the Principal
Market is not the principal securities exchange or trading market for such
security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
as of such time of determination, or if the foregoing does not apply, the bid
price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg as of such time of
determination, or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any market
makers for such security as reported in the “pink sheets” by OTC Markets Group
Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid
Price cannot be calculated for a security as of the particular time of
determination on any of the foregoing bases, the Bid Price of such security as
of such time of determination 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 such dispute
shall be resolved in accordance with the procedures in Section 11. All such
determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period.

 

9.5        “Black Scholes Value” means the value of the Warrants based on the
Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg
determined as of the day immediately following the first public announcement of
the applicable Change of Control, or, if the Change of Control is not publicly
announced, the date the Change of Control is consummated, for pricing purposes
and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of the Warrants as of such date of
request, (ii) an expected volatility equal to 100%, (iii) the underlying price
per share used in such calculation shall be the greater of (a) the highest
Weighted Average Price during the five (5) Trading Days prior to the closing of
the Change of Control and (b) the sum of the price per share being offered in
cash, if any, plus the value of any non-cash consideration, if any, being
offered in such Change of Control, (iv) a zero cost of borrow and (v) a 360 day
annualization factor.

 

9.6        “Bloomberg” means Bloomberg Financial Markets.

 

9.7        “Business Day” means any day other than Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or required by
law or executive order to remain closed.

 

9.8        “Change of Control” means any Fundamental Transaction other than
(i) any reorganization, recapitalization or reclassification of the Common Stock
in which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respect, the
holders of the voting power of the surviving entity (or entities with the
authority or voting power to elect the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities) after
such reorganization, recapitalization or reclassification, (ii) pursuant to a
migratory merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company or (iii) a merger in connection with a bona fide
acquisition by the Company of any Person in which (x) the gross consideration
paid, directly or indirectly, by the Company in such acquisition is not greater
than 40% of the Company’s market capitalization as calculated on the date of the
consummation of such merger and (y) such merger does not contemplate a change to
the identity of a majority of the board of directors of the Company.
Notwithstanding anything herein to the contrary, any transaction or series of
transaction that, directly or indirectly, results in the Company or the
Successor Entity not having Common Stock or common stock, as applicable,
registered under the 1934 Act and listed on an Eligible Market shall be deemed a
Change of Control.

 

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9.9        “Closing Bid Price” and “Closing Sale Price” means, for any security
as of any date, the last closing bid price and last closing trade price,
respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the OTC Link
or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, 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 such dispute shall be resolved pursuant to
Section 11. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or other similar
transaction during the applicable calculation period.

 

9.10       “Common Stock” means (i) the Company’s shares of Common Stock and
(ii) any share capital into which such Common Stock shall have been changed or
any share capital resulting from a reclassification of such Common Stock.

 

9.11       “Control” (including the terms “controlling”, “controlled by” or
“under common control with”) means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.

 

9.12       “Convertible Securities” means any stock or securities (other than
Options) directly or indirectly convertible into or exercisable or exchangeable
for shares of Common Stock.

 

9.13       “Eligible Market” means The NASDAQ Capital Market, the NYSE American
LLC, The NASDAQ Global Select Market, The NASDAQ Global Market or The New York
Stock Exchange, Inc.

 

9.14       “Excluded Securities” means any shares of Common Stock issued or
issuable, or deemed issued or issuable pursuant to Section 4.1: (i) in
connection with any Approved Stock Plan, including, for the avoidance of doubt,
the issuance of equity awards (including Options or Convertible Securities)
pursuant to any such Approved Stock Plan after the Subscription Date, (ii) upon
exercise of the Warrants, (iii) upon conversion, exercise, exchange or
settlement of any Options or Convertible Securities that are outstanding on the
day immediately preceding the Subscription Date, (iv) upon the issuance of
“payment-in-kind” dividends of additional shares of the Company’s Series A-1
Convertible Preferred Stock, as contemplated by the terms thereof, and
(v) pursuant to acquisitions, divestitures, licenses, partnerships,
collaborations or strategic transactions approved by the Board of Directors or a
majority of the members of a committee of directors established for such
purposes; provided that any such issuance shall only be to a Person (or to the
equity holders of a Person) that is, itself or through its subsidiaries, an
operating company or an asset in a business synergistic with the business of the
Company and shall provide to the Company additional benefits in addition to the
investment of funds, but shall not include a transaction in which the Company is
issuing securities primarily for the purpose of raising capital or to an entity
whose primary business is investing in securities.

 

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9.15       “Expiration Date” means the date that is sixty (60) months after the
Issuance Date in the case of the Five-Year Warrants and on the date that is
fifteen (15) months after the Issuance Date in the case of the 15-Month Warrants
or, if any such date falls on a day other than a Business Day or on which
trading does not take place on the Principal Market (a “Holiday”), the next date
that is not a Holiday, as the same may be extended pursuant to Section 3.3.7.

 

9.16       “Fundamental Transaction” means (A) that the Company shall, directly
or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, (i) consolidate or merge with or into (whether or
not the Company is the surviving corporation) another Subject Entity, or
(ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its “significant
subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject
Entities, or (iii) make, or allow one or more Subject Entities to make, or allow
the Company to be subject to or have its shares of Common Stock be subject to or
party to one or more Subject Entities making, a purchase, tender or exchange
offer that is accepted by the holders of at least either (x) 50% of the
outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common
Stock calculated as if any shares of Common Stock held by all Subject Entities
making or party to, or Affiliated with any Subject Entities making or party to,
such purchase, tender or exchange offer were not outstanding; or (z) such number
of shares of Common Stock such that all Subject Entities making or party to, or
Affiliated with any Subject Entity making or party to, such purchase, tender or
exchange offer, become collectively the beneficial owners (as defined in
Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of
Common Stock, or (iv) consummate a stock purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby all
such Subject Entities, individually or in the aggregate, acquire, either (x) at
least 50% of the outstanding shares of Common Stock, (y) at least 50% of the
outstanding shares of Common Stock calculated as if any shares of Common Stock
held by all the Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such stock purchase agreement or other
business combination were not outstanding; or (z) such number of shares of
Common Stock such that the Subject Entities become collectively the beneficial
owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the
outstanding shares of Common Stock, or (v) reorganize, recapitalize or
reclassify its shares of Common Stock, (B) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or the Subject
Entities in the aggregate to be or become the “beneficial owner” (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, whether through
acquisition, purchase, assignment, conveyance, tender, tender offer, exchange,
reduction in outstanding shares of Common Stock, merger, consolidation, business
combination, reorganization, recapitalization, spin-off, scheme of arrangement,
reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock, (y) at least 50%
of the aggregate ordinary voting power represented by issued and outstanding
shares of Common Stock not held by all such Subject Entities as of the Issuance
Date calculated as if any shares of Common Stock held by all such Subject
Entities were not outstanding, or (z) a percentage of the aggregate ordinary
voting power represented by issued and outstanding shares of Common Stock or
other equity securities of the Company sufficient to allow such Subject Entities
to effect a statutory short form merger or other transaction requiring other
stockholders of the Company to surrender their Common Stock without approval of
the stockholders of the Company or (C) directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related transactions, the
issuance of or the entering into any other instrument or transaction structured
in a manner to circumvent, or that circumvents, the intent of this definition in
which case this definition shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this definition to the
extent necessary to correct this definition or any portion of this definition
that may be defective or inconsistent with the intended treatment of such
instrument or transaction.

 

 34 

 

 

9.17       “Group” means a “group” as that term is used in Section 13(d) of the
1934 Act and as defined in Rule 13d-5 thereunder.

 

9.18       “Merger Event” means any of the following: (i) a sale, lease or other
transfer of all or substantially all assets of the Company, (ii) any merger or
consolidation involving the Company in which the Company is not the surviving
entity or in which the outstanding shares of the Company’s capital stock are
otherwise converted into or exchanged for shares of capital stock or other
securities or property of another entity, or (iii) any sale by holders of the
outstanding voting equity securities of the Company in a single transaction or
series of related transactions of shares constituting a majority of the
outstanding combined voting power of the Company.

 

9.19       “Option Value” means the value of an Option based on the
Black-Scholes Option Pricing model obtained from the “OV” function on Bloomberg
determined as of the day of the most recent Closing Sale Price of the Common
Stock prior to the public announcement of the pricing of the applicable Option
(or, if the pricing is not publicly announced, on the most recent Closing Sale
Price of the Common Stock prior to the pricing of the applicable Option) and
reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate
for a period equal to the remaining term of the applicable Option as of the
applicable date of determination, (ii) an expected volatility equal to 50%,
(iii) an underlying price per share equal to the most recent Closing Sale Price
of the Common Stock prior to the public announcement of the pricing of the
applicable Option (or, if the pricing is not publicly announced, on the most
recent Closing Sale Price of the Common Stock prior to the pricing of the
applicable Option), (iv) a zero cost of borrow and (v) a 360-day annualization
factor.

 

9.20       “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

 

9.21       “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person, including such entity whose common
stock or equivalent equity security is quoted or listed on an Eligible Market
(or, if so elected by the Holder, any other market, exchange or quotation
system), or, if there is more than one such Person or such entity, the Person or
such entity designated by the Holder or in the absence of such designation, such
Person or entity with the largest public market capitalization as of the date of
consummation of the Fundamental Transaction or Change of Control.

 

9.22       “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.

 

9.23       “Principal Market” means the principal securities exchange or
securities market on which the Common Stock is then traded.

 

9.24       “Standard Settlement Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s primary Trading Market
with respect to the Common Stock as in effect on the date of delivery of the
Notice of Exercise.

 

9.25       “Subject Entity” means any Person, Persons or Group or any Affiliate
or associate of any such Person, Persons or Group.

 

9.26       “Successor Entity” means one or more Person or Persons (or, if so
elected by the Holder, the Company or Parent Entity) formed by, resulting from
or surviving any Fundamental Transaction or Change of Control or one or more
Person or Persons (or, if so elected by the Holder, the Company or the Parent
Entity) with which such Fundamental Transaction or Change of Control shall have
been entered into.

 

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9.27       “Trading Day” means any day on which the Common Stock is traded on
the Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded.

 

9.28       “Transaction Documents” means any agreement entered into by and
between the Company and the Holder, as applicable.

 

9.29       “Weighted Average Price” means, for any security as of any date, the
dollar volume-weighted average price for such security on the Principal Market
during the period beginning at 9:30:01 a.m., New York time (or such other time
as the Principal Market publicly announces is the official open of trading), and
ending at 4:00:00 p.m., New York time (or such other time as the Principal
Market publicly announces is the official close of trading), as reported by
Bloomberg through its “Volume at Price” function or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York time (or such other time
as such market publicly announces is the official open of trading), and ending
at 4:00:00 p.m., New York time (or such other time as such market publicly
announces is the official close of trading), as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest Closing Bid Price and the lowest
closing ask price of any of the market makers for such security as reported in
the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC
Markets Inc.). If the Weighted Average Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Weighted Average 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 such dispute
shall be resolved pursuant to Section 11 with the term “Weighted Average Price”
being substituted for the term “Exercise Price.” All such determinations shall
be appropriately adjusted for any stock dividend, stock split, stock
combination, reclassification or other similar transaction during the applicable
calculation period.

 

[Remainder of page intentionally left blank. Signature page follows.]

 

 36 

 

 

IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the parties
hereto as of the day and year first above written.

 

  OUTLOOK THERAPEUTICS, INC.       By: /s/ Lawrence A. Kenyon   Name: Lawrence
A. Kenyon   Title: President, CEO & CFO       AMERICAN STOCK TRANSFER & TRUST
COMPANY, LLC       By: /s/ Michael Legregin   Name: Michael Legregin   Title:
Senior Vice President

 

[Signature Page to Warrant Agreement]

 

 

 

 

EXHIBIT A

 

[FORM OF FIVE-YEAR WARRANT GLOBAL CERTIFICATE]

 

OUTLOOK THERAPEUTICS, INC.

 

FIVE-YEAR WARRANT CERTIFICATE

 

THIS CERTIFIES THAT, for value received is the registered holder of a Warrant or
Warrants (the “Warrant “) expiring the date sixty (60) months after the Initial
Exercisability Date or, if such date falls on a day other than a Business Day or
on which trading does not take place on the Principal Market (a “Holiday”), the
next day that is not a Holiday, subject to extension in certain events
(“Expiration Date”), to purchase 10,340,000 fully paid and non-assessable shares
(“Shares”) of Common Stock, par value $0.01 per share (“Common Stock”), of
Outlook Therapeutics, Inc., a Delaware corporation (the “Company”). The Warrant
entitles the holder thereof to purchase from the Company such number of shares
of Common Stock at the price of $2.90 per share (subject to adjustment), upon
surrender of this Warrant Certificate and payment of the Warrant Price to
American Stock Transfer & Trust Company, LLC (the “Warrant Agent”), at its
offices designated for such purpose, but only subject to the conditions set
forth herein and in the Warrant Agreement between the Company and the Warrant
Agent (as may be amended from time to time, the “Warrant Agreement”). The
Warrant Agreement provides that upon the occurrence of certain events, the
Warrant Price and the number of Shares purchasable hereunder, set forth on the
face hereof, may, subject to certain conditions, be adjusted. The term “Warrant
Price” as used in this Warrant Certificate refers to the price per share of
Common Stock at which Shares may be purchased at the time the Warrant is
exercised. Capitalized terms used and not defined herein shall have the meanings
set forth in the Warrant Agreement.

 

No fraction of a Share will be issued upon any exercise of a Warrant. If the
holder of a Warrant would be entitled to receive a fraction of a Share upon any
exercise of a Warrant, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to such fraction multiplied by the Exercise
Price.

 

Upon any exercise of the Warrant for less than the total number of full Shares
provided for herein, there shall be issued to the registered holder hereof or
the registered holder’s assignee a new Warrant Certificate covering the number
of Shares for which the Warrant has not been exercised, provided that such
holder has previously surrendered this Warrant to the Warrant Agent.

 

Upon surrender of the Warrant Certificate for transfer, properly endorsed with
signatures properly guaranteed and accompanied by appropriate instructions for
transfer, the Warrant Agent shall register the transfer. A new Warrant
Certificate or Warrant Certificates evidencing in the aggregate a like number of
Warrants shall be issued and the old Warrant Certificate shall be canceled.

 

Warrant Certificates, when surrendered to the Warrant Agent, may be transferred
or exchanged in the manner and subject to the limitations provided in the
Warrant Agreement, but without payment of any service charge, for another
Warrant Certificate or Warrant Certificates evidencing in the aggregate a like
number of Warrants.

 

 

 

 

The Company and the Warrant Agent may deem and treat the registered holder as
the absolute owner of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.

 

This Warrant Certificate does not entitle the registered holder to any of the
rights of a stockholder of the Company.

 

  OUTLOOK THERAPEUTICS, INC.       By:                               Name:  
Title:       COUNTERSIGNED:       AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC  
as Warrant Agent       By:                               Authorized Officer

 

[Signature page to Warrant Certificate]

 

 

 

 

ELECTION TO PURCHASE FORM

 

(to be executed by the registered holder in order to exercise Warrants)

 

The undersigned registered holder irrevocably elects to exercise Warrants to
purchase            shares of Common Stock represented by this Warrant
Certificate and to purchase such shares of Common Stock issuable upon the
exercise of such Warrants, and requests that such shares shall be issued in the
name of

 

 

 

 

(PLEASE TYPE OR PRINT NAME AND ADDRESS)             (SOCIAL SECURITY OR TAX
IDENTIFICATION NUMBER) and be delivered to:         (PLEASE PRINT OR TYPE NAME
AND ADDRESS)

 

and, at the sole election of the registered holder, if such number of Warrants
shall not be all the Warrants evidenced by this Warrant Certificate, that a new
Warrant Certificate for the balance of such Warrants be registered in the name
of, and delivered to, the registered holder at the address stated below:

 

Dated:                                          (SIGNATURE)                  
(ADDRESS)                   (TAX IDENTIFICATION NUMBER)  

 

 

 

 

ASSIGNMENT

 

(to be executed by the registered holder in order to assign Warrants)

 

For Value Received,                                          hereby sells,
assigns, and transfers unto

 

 

 

 

(PLEASE TYPE OR PRINT NAME AND ADDRESS)             (SOCIAL SECURITY OR TAX
IDENTIFICATION NUMBER) and be delivered to:         (PLEASE PRINT OR TYPE NAME
AND ADDRESS)

 

Warrants to purchase                      shares of Common Stock represented by
this Warrant Certificate, and hereby irrevocably constitutes and appoints
                               Attorney to transfer this Warrant Certificate on
the books of the Company, with full power of substitution in the premises.

 

 

 

Dated:                                                (SIGNATURE)  

 

The signature to the assignment of the Subscription Form must correspond to the
name written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever, and must be
guaranteed by a commercial bank or trust company or a member firm of the
American Stock Exchange, New York Stock Exchange, Pacific Stock Exchange or
Chicago Stock Exchange.

 

[Signature page to Warrant Certificate]

 

 

 

 

EXHIBIT B

 

[FORM OF 15-MONTH WARRANT GLOBAL CERTIFICATE]

 

OUTLOOK THERAPEUTICS, INC.

 

15-MONTH WARRANT CERTIFICATE

 

THIS CERTIFIES THAT, for value received is the registered holder of a Warrant or
Warrants (the “Warrant “) expiring the date fifteen (15) months after the
Initial Exercisability Date or, if such date falls on a day other than a
Business Day or on which trading does not take place on the Principal Market (a
“Holiday”), the next day that is not a Holiday, subject to extension in certain
events (“Expiration Date”), to purchase 10,340,000 fully paid and non-assessable
shares (“Shares”) of Common Stock, par value $0.01 per share (“Common Stock”),
of Outlook Therapeutics, Inc., a Delaware corporation (the “Company”). The
Warrant entitles the holder thereof to purchase from the Company such number of
shares of Common Stock at the price of $2.90 per share (subject to adjustment),
upon surrender of this Warrant Certificate and payment of the Warrant Price to
American Stock Transfer & Trust Company, LLC (the “Warrant Agent”), at its
offices designated for such purpose, but only subject to the conditions set
forth herein and in the Warrant Agreement between the Company and the Warrant
Agent (as may be amended from time to time, the “Warrant Agreement”). The
Warrant Agreement provides that upon the occurrence of certain events, the
Warrant Price and the number of Shares purchasable hereunder, set forth on the
face hereof, may, subject to certain conditions, be adjusted. The term “Warrant
Price” as used in this Warrant Certificate refers to the price per share of
Common Stock at which Shares may be purchased at the time the Warrant is
exercised. Capitalized terms used and not defined herein shall have the meanings
set forth in the Warrant Agreement.

 

No fraction of a Share will be issued upon any exercise of a Warrant. If the
holder of a Warrant would be entitled to receive a fraction of a Share upon any
exercise of a Warrant, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to such fraction multiplied by the Exercise
Price.

 

Upon any exercise of the Warrant for less than the total number of full Shares
provided for herein, there shall be issued to the registered holder hereof or
the registered holder’s assignee a new Warrant Certificate covering the number
of Shares for which the Warrant has not been exercised, provided that such
holder has previously surrendered this Warrant to the Warrant Agent.

 

Upon surrender of the Warrant Certificate for transfer, properly endorsed with
signatures properly guaranteed and accompanied by appropriate instructions for
transfer, the Warrant Agent shall register the transfer. A new Warrant
Certificate or Warrant Certificates evidencing in the aggregate a like number of
Warrants shall be issued and the old Warrant Certificate shall be canceled.

 

Warrant Certificates, when surrendered to the Warrant Agent, may be transferred
or exchanged in the manner and subject to the limitations provided in the
Warrant Agreement, but without payment of any service charge, for another
Warrant Certificate or Warrant Certificates evidencing in the aggregate a like
number of Warrants.

 

[Signature page to Warrant Certificate]

 

 

 

 

The Company and the Warrant Agent may deem and treat the registered holder as
the absolute owner of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.

 

This Warrant Certificate does not entitle the registered holder to any of the
rights of a stockholder of the Company.

 

  OUTLOOK THERAPEUTICS, INC.       By:                           Name:   Title:
      COUNTERSIGNED:       AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC   as
Warrant Agent       By:     Authorized Officer

 

[Signature page to Warrant Certificate]

 

 

 

 

ELECTION TO PURCHASE FORM

 

(to be executed by the registered holder in order to exercise Warrants)

 

The undersigned registered holder irrevocably elects to exercise Warrants to
purchase            shares of Common Stock represented by this Warrant
Certificate and to purchase such shares of Common Stock issuable upon the
exercise of such Warrants, and requests that such shares shall be issued in the
name of

 

 

 

 

(PLEASE TYPE OR PRINT NAME AND ADDRESS)             (SOCIAL SECURITY OR TAX
IDENTIFICATION NUMBER) and be delivered to:         (PLEASE PRINT OR TYPE NAME
AND ADDRESS)

 

and, at the sole election of the registered holder, if such number of Warrants
shall not be all the Warrants evidenced by this Warrant Certificate, that a new
Warrant Certificate for the balance of such Warrants be registered in the name
of, and delivered to, the registered holder at the address stated below:

 

Dated:                                          (SIGNATURE)                  
(ADDRESS)                   (TAX IDENTIFICATION NUMBER)  

 

 

 

 

ASSIGNMENT

 

(to be executed by the registered holder in order to assign Warrants)

 

For Value Received,                                          hereby sells,
assigns, and transfers unto

 

 

 

 

(PLEASE TYPE OR PRINT NAME AND ADDRESS)             (SOCIAL SECURITY OR TAX
IDENTIFICATION NUMBER) and be delivered to:         (PLEASE PRINT OR TYPE NAME
AND ADDRESS)

 

Warrants to purchase                      shares of Common Stock represented by
this Warrant Certificate, and hereby irrevocably constitutes and appoints
                               Attorney to transfer this Warrant Certificate on
the books of the Company, with full power of substitution in the premises.

 

 

 

Dated:                                                 (SIGNATURE)  

 

The signature to the assignment of the Subscription Form must correspond to the
name written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever, and must be
guaranteed by a commercial bank or trust company or a member firm of the
American Stock Exchange, New York Stock Exchange, Pacific Stock Exchange or
Chicago Stock Exchange.

 

  - 6 - 

 

 

Exhibit C

 

 

[FORM OF CERTIFICATED FIVE-YEAR WARRANT]

 

OUTLOOK THERAPEUTICS, INC

 

FIVE-YEAR WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.:                   

Number of Shares of Common Stock:                           

Date of Issuance: April 12, 2019 (“Issuance Date”)

 

Outlook Therapeutics, Inc., a company organized under the laws of Delaware (the
“Company”), hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, [HOLDER], the
registered holder hereof or its permitted assigns (the “Holder”), is entitled,
subject to the terms set forth below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, at any time or times on or
after April 12, 2019 (the “Initial Exercisability Date”), but not after 11:59
p.m., New York time, on the Expiration Date, (as defined below),
                    (                  ) fully paid non-assessable shares of
Common Stock (as defined below), subject to adjustment as provided herein (the
“Warrant Shares”). Except as otherwise defined herein, capitalized terms in this
Warrant to Purchase Common Stock (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, this “Warrant”), shall
have the meanings set forth in Section 16. This Warrant is one of the Five-Year
Warrants to Purchase Common Stock (the “Warrants”) issued pursuant to (i) that
certain Underwriting Agreement, dated as of April 10, 2019 (the “Subscription
Date”) by and between the Company and Oppenheimer & Co. Inc. as representative
of the several underwriters named therein, (ii) the Company’s Registration
Statement on Form S-1 (File number 333-229761) (together with the additional
registration statement filed by the Company pursuant to Rule 462(b) of the 1933
Act (as defined below) the “Registration Statement”). This Warrant shall
initially be issued and maintained in the form of a security held in book-entry
form and the Depository Trust Company or its nominee (“DTC”) shall initially be
the sole registered holder of this Warrant, subject to a Holder’s right to elect
to receive a Warrant in certificated form pursuant to the terms of the Warrant
Agent Agreement, in which case this sentence shall not apply.

 

  - 7 - 

 

 

1.       EXERCISE OF WARRANT.

 

(a)       Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder at any time or times on or after the
Initial Exercisability Date, in whole or in part, by delivery (whether via
facsimile, electronic mail or otherwise) of a written notice, in the form
attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election
to exercise this Warrant. Within one (1) Trading Day following the delivery of
the Exercise Notice, the Holder shall make payment to the Company of an amount
equal to the Exercise Price in effect on the date of such exercise multiplied by
the number of Warrant Shares as to which this Warrant is being exercised (the
“Aggregate Exercise Price”) in cash by wire transfer of immediately available
funds or, if the provisions of Section 1(d) are applicable, by notifying the
Company that this Warrant is being exercised pursuant to a Cashless Exercise (as
defined in Section 1(d)). The Holder shall not be required to deliver the
original Warrant in order to effect an exercise hereunder, nor shall any
ink-original signature or medallion guarantee (or other type of guarantee or
notarization) with respect to any Exercise Notice be required. Execution and
delivery of the Exercise Notice with respect to less than all of the Warrant
Shares 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 and the Holder shall not be required to physically surrender
this Warrant to the Company until the Holder has purchased all of the Warrant
Shares available hereunder and the Warrant has been exercised in full, in which
case, the Holder shall surrender this Warrant to the Company for cancellation
within three (3) Trading Days of the date on which the final Exercise Notice is
delivered to the Company. On or before the first (1st) Trading Day following the
date on which the Holder has delivered the applicable Exercise Notice, the
Company shall transmit by facsimile or electronic mail an acknowledgment of
confirmation of receipt of the Exercise Notice, in the form attached to the
Exercise Notice, to the Holder and the Company’s transfer agent (the “Transfer
Agent”). So long as the Holder delivers the Aggregate Exercise Price (or notice
of a Cashless Exercise, if applicable) on or prior to the first (1st) Trading
Day following the date on which the Exercise Notice has been delivered to the
Company, then on or prior to the earlier of (i) the second (2nd) Trading Day and
(ii) the number of Trading Days comprising the Standard Settlement Period, in
each case following the date on which the Exercise Notice has been delivered to
the Company, or, if the Holder does not deliver the Aggregate Exercise Price (or
notice of a Cashless Exercise, if applicable) on or prior to the first (1st)
Trading Day following the date on which the Exercise Notice has been delivered
to the Company, then on or prior to the first (1st) Trading Day following the
date on which the Aggregate Exercise Price (or notice of a Cashless Exercise) is
delivered (such earlier date, or if later, the earliest day on which the Company
is required to deliver Warrant Shares pursuant to this Section 1(a), the “Share
Delivery Date”), the Company shall (X) provided that the Transfer Agent is
participating in The Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program, credit such aggregate number of Warrant Shares to which the
Holder is entitled pursuant to such exercise to the Holder’s or its designee’s
balance account with DTC through its Deposit / Withdrawal At Custodian system,
or (Y) if the Transfer Agent is not participating in the DTC Fast Automated
Securities Transfer Program, issue and dispatch by overnight courier to the
address or e-mail address as specified in the Exercise Notice, evidence of
credit of book-entry shares, registered in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is entitled
pursuant to such exercise. If the Company fails for any reason to deliver to
such registered holder or Participant, as the case may be, the Warrant Shares
subject to an exercise notice by the Share Delivery Date, the Company shall pay
to the registered holder, in cash, as liquidated damages and not as a penalty,
for each $1,000 of Warrant Shares subject to such exercise (based on the
Weighted Average Price of the Common Stock on the date of the applicable
exercise notice), $10 per Trading Day (increasing to $20 per Trading Day on the
fifth Trading Day after such liquidated damages begin to accrue) for each
Trading Day after such Share Delivery Date until such Warrant Shares are
delivered or the registered holder rescinds such exercise. The Company shall be
responsible for all fees and expenses of the Transfer Agent and all fees and
expenses with respect to the issuance of Warrant Shares via DTC, if any,
including without limitation for same day processing. Upon delivery of the
Exercise Notice, the Holder shall be deemed for all corporate purposes to have
become the holder of record and beneficial owner of the Warrant Shares with
respect to which this Warrant has been exercised, irrespective of the date such
Warrant Shares are credited to the Holder’s DTC account or the date of delivery
of the certificates evidencing such Warrant Shares, as the case may be. If this
Warrant is physically delivered to the Company in connection with any exercise
pursuant to this Section 1(a) and the number of Warrant Shares represented by
this Warrant submitted for exercise is greater than the number of Warrant Shares
being acquired upon an exercise, then the Company shall as soon as practicable
and in no event later than three (3) Trading Days after any exercise and at its
own expense, issue and deliver to the Holder (or its designee) a new Warrant (in
accordance with Section 7(d)) representing the right to purchase the number of
Warrant Shares issuable immediately prior to such exercise under this Warrant,
less the number of Warrant Shares with respect to which this Warrant is
exercised. No fractional Warrant Shares are to be issued upon the exercise of
this Warrant, but rather the Company shall pay a cash adjustment equal to such
fraction multiplied by the Exercise Price. The Company shall pay any and all
transfer, stamp, issuance and similar taxes, costs and expenses (including,
without limitation, fees and expenses of the Transfer Agent) that may be payable
with respect to the issuance and delivery of Warrant Shares upon exercise of
this Warrant. The Company’s obligations to issue and deliver Warrant Shares in
accordance with the terms and subject to the conditions 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; provided,
however, that the Company shall not be required to deliver Warrant Shares with
respect to an exercise prior to the Holder’s delivery of the Aggregate Exercise
Price (or notice of a Cashless Exercise) with respect to such exercise.

 

  - 8 - 

 

 

(b)       Exercise Price. For purposes of this Warrant, “Exercise Price” means
$2.90 per share, subject to adjustment as provided herein.

 

(c)       Company’s Failure to Timely Deliver Securities. If either (I) the
Company shall fail for any reason or for no reason on or prior to the applicable
Share Delivery Date, if (x) the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, to issue to the Holder by book-entry
credit the number of shares of Common Stock to which the Holder is entitled and
register such Common Stock on the Company’s share register or (y) the Transfer
Agent is participating in the DTC Fast Automated Securities Transfer Program, to
credit the Holder’s balance account with DTC, for such number of shares of
Common Stock to which the Holder is entitled upon the Holder’s exercise of this
Warrant or (II) a registration statement (which may be the Registration
Statement) covering the issuance or resale of the Warrant Shares that are the
subject of the Exercise Notice (the “Exercise Notice Warrant Shares”) is not
available for the issuance or resale, as applicable, of such Exercise Notice
Warrant Shares and (x) the Company fails to promptly, but in no event later than
one (1) Business Day after such registration statement becomes unavailable, to
so notify the Holder and (y) the Company is unable to deliver the Exercise
Notice Warrant Shares electronically without any restrictive legend by crediting
such aggregate number of Exercise Notice Warrant Shares to the Holder’s or its
designee’s balance account with DTC through its Deposit / Withdrawal At
Custodian system (the event described in the immediately foregoing clause
(II) is hereinafter referred to as a “Notice Failure” and, together with the
event described in clause (I) above, an “Exercise Failure”), then, in addition
to all other remedies available to the Holder, if on or prior to the applicable
Share Delivery Date either (I) if the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, the Company shall fail to issue
by book-entry credit to the Holder and register such shares of Common Stock on
the Company’s share register or, if the Transfer Agent is participating in the
DTC Fast Automated Securities Transfer Program, credit the Holder’s balance
account with DTC for the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise hereunder or pursuant to the Company’s
obligation pursuant to clause (ii) below or (II) a Notice Failure occurs, and if
on or after such Trading Day the Holder is required by its broker to purchase
(in an open market transaction or otherwise) or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale
by the Holder of the Warrant Shares that the Holder anticipated receiving upon
such exercise from the Company (a “Buy-In”), then the Company shall (A) pay in
cash to the Holder the amount, if any, by which (x) the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any)
for the shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (1) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein shall limit a Holder’s 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 Company’s failure to timely credit by book
entry the Warrant Shares (or to electronically deliver such Warrant Shares) upon
the exercise of this Warrant as required pursuant to the terms hereof. While
this Warrant is outstanding, the Company shall cause its transfer agent to
participate in the DTC Fast Automated Securities Transfer Program. In addition
to the foregoing rights, (i) if the Company fails to deliver the applicable
number of Warrant Shares upon an exercise pursuant to Section 1 by the
applicable Share Delivery Date, then the Holder shall have the right to rescind
such exercise in whole or in part and retain and/or have the Company return, as
the case may be, any portion of this Warrant that has not been exercised
pursuant to such Exercise Notice; provided that the rescission of an exercise
shall not affect the Company’s obligation to make any payments that have accrued
prior to the date of such notice pursuant to this Section 1(c) or otherwise, and
(ii) if a registration statement (which may be the Registration Statement)
covering the issuance or resale of the Warrant Shares that are subject to an
Exercise Notice is not available for the issuance or resale, as applicable, of
such Exercise Notice Warrant Shares and the Holder has submitted an Exercise
Notice prior to receiving notice of the non-availability of such registration
statement and the Company has not already delivered the Warrant Shares
underlying such Exercise Notice electronically without any restrictive legend by
crediting such aggregate number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the Holder’s or its designee’s balance
account with DTC through its Deposit / Withdrawal At Custodian system, the
Holder shall have the option, by delivery of notice to the Company, to
(x) rescind such Exercise Notice in whole or in part and retain or have
returned, as the case may be, any portion of this Warrant that has not been
exercised pursuant to such Exercise Notice; provided that the rescission of an
Exercise Notice shall not affect the Company’s obligation to make any payments
that have accrued prior to the date of such notice pursuant to this
Section 1(c) or otherwise, and/or (y) switch some or all of such Exercise Notice
from a cash exercise to a Cashless Exercise.

 

  - 9 - 

 

 

(d)       Cashless Exercise. Notwithstanding anything contained herein to the
contrary, if a registration statement (which may be the Registration Statement)
covering the issuance or resale of the Exercise Notice Warrant Shares is not
available for the issuance or resale, as applicable, of such Exercise Notice
Warrant Shares, the Holder may, in its sole discretion, exercise this Warrant in
whole or in part and, in lieu of making the cash payment otherwise contemplated
to be made to the Company upon such exercise in payment of the Aggregate
Exercise Price, elect instead to receive upon such exercise the “Net Number” of
shares of Common Stock determined according to 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 of shares with respect to which this Warrant is then being
exercised.

 

B=   as applicable: (i) the Closing Sale Price of the Common Stock on the
Trading Day immediately preceding the date of the applicable Exercise Notice if
such Exercise Notice is (1) both executed and delivered pursuant to
Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and
delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening
of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS
promulgated under the federal securities laws) on such Trading Day, (ii) at the
option of the Holder, either (y) the Weighted Average Price on the Trading Day
immediately preceding the date of the applicable Notice of Exercise or (z)  the
Bid Price of the Common Stock as of the time of the Holder’s execution of the
applicable Exercise Notice if such Exercise Notice is executed during “regular
trading hours” on a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular trading hours” on a
Trading Day) pursuant to Section 1(a) hereof or (iii) the Closing Sale Price of
the Common Stock on the date of the applicable Exercise Notice if the date of
such Exercise Notice is a Trading Day and such Exercise Notice is both executed
and delivered pursuant to Section 1(a) hereof after the close of “regular
trading hours” on such Trading Day.

 

C=   the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

The Company agrees to make all calculations related to a Cashless Exercise and
will provide the Warrant Agent with issuance instructions.

 

If Warrant Shares are issued in such a cashless exercise, the Company
acknowledges and agrees that in accordance with Section 3(a)(9) of the 1933 Act,
the Warrant Shares shall take on the registered characteristics of the Warrants
being exercised, and the holding period of the Warrants being exercised may be
tacked on to the holding period of the Warrant Shares. The Company agrees not to
take any position contrary to this Section 1(d). Without limiting the rights of
a Holder to receive Warrant Shares on a “cashless exercise,” and to receive the
cash payments contemplated pursuant to Sections 1(a), 1(c) and 4(b), in no event
will the Company be required to pay to the Holder and cash or other
consideration or otherwise net cash settle a Warrant exercise.

 

(e)       Disputes. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the Holder the number of Warrant Shares that are not
disputed and resolve such dispute in accordance with Section 11.

 

  - 10 - 

 

 

(f)        Beneficial Ownership. Notwithstanding anything to the contrary
contained herein, the Company shall not effect the exercise of any portion of
this Warrant, and the Holder shall not have the right to exercise any portion of
this Warrant, pursuant to the terms and conditions of this Warrant and any such
exercise shall be null and void and treated as if never made, to the extent that
after giving effect to such exercise, the Holder together with the other
Attribution Parties collectively would beneficially own in excess of
[4.99%][9.99%] (the “Maximum Percentage”) of the number of shares of Common
Stock outstanding immediately after giving effect to such exercise. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by the Holder and the other Attribution Parties shall include
the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of Common Stock
that would be issuable upon (A) exercise of the remaining, unexercised portion
of this Warrant beneficially owned by the Holder or any of the other Attribution
Parties and (B) exercise or conversion of the unexercised or unconverted portion
of any other securities of the Company (including, without limitation, any
convertible notes or convertible preferred stock or warrants, including the
other Warrants) beneficially owned by the Holder or any other Attribution Party
subject to a limitation on conversion or exercise analogous to the limitation
contained in this Section 1(f). For purposes of this Section 1(f), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”). For purposes of this Warrant,
in determining the number of outstanding shares of Common Stock the Holder may
acquire upon the exercise of this Warrant without exceeding the Maximum
Percentage, the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q and Current Reports on Form 8-K or other public
filing with the Securities and Exchange Commission (the “SEC”), as the case may
be, (y) a more recent public announcement by the Company or (z) any other
written notice by the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding (the “Reported Outstanding Share Number”). If
the Company receives an Exercise Notice from the Holder at a time when the
actual number of outstanding shares of Common Stock is less than the Reported
Outstanding Share Number, the Company shall (i) notify the Holder in writing of
the number of shares of Common Stock then outstanding and, to the extent that
such Exercise Notice would otherwise cause the Holder’s beneficial ownership, as
determined pursuant to this Section 1(f), to exceed the Maximum Percentage, the
Holder must notify the Company of a reduced number of Warrant Shares to be
purchased pursuant to such Exercise Notice (the number of shares by which such
purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably
practicable, the Company shall return to the Holder any exercise price paid by
the Holder for the Reduction Shares. For any reason at any time, upon the
written or oral request of the Holder, the Company shall within one (1) Business
Day confirm orally and in writing or by electronic mail to the Holder the number
of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Warrant,
by the Holder and any other Attribution Party since the date as of which the
Reported Outstanding Share Number was reported. In the event that the issuance
of Common Stock to the Holder upon exercise of this Warrant results in the
Holder and the other Attribution Parties being deemed to beneficially own, in
the aggregate, more than the Maximum Percentage of the number of outstanding
shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the
number of shares so issued by which the Holder’s and the other Attribution
Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the
“Excess Shares”) shall be deemed null and void and shall be cancelled ab initio,
and the Holder shall not have the power to vote or to transfer the Excess
Shares. As soon as reasonably practicable after the issuance of the Excess
Shares has been deemed null and void, the Company shall return to the Holder the
exercise price paid by the Holder for the Excess Shares. Upon delivery of a
written notice to the Company, the Holder may from time to time increase or
decrease the Maximum Percentage to any other percentage not in excess of 9.99%
as specified in such notice; provided that (i) any such increase in the Maximum
Percentage will not be effective until the sixty-first (61st) day after such
notice is delivered to the Company and (ii) any such increase or decrease will
apply only to the Holder and the other Attribution Parties and not to any other
holder of Warrants that is not an Attribution Party of the Holder. For purposes
of clarity, the shares of Common Stock issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to be
beneficially owned by the Holder for any purpose including for purposes of
Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to
exercise this Warrant pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of exercisability. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 1(f) to the extent necessary to correct this paragraph
or any portion of this paragraph that may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section 1(f) or to
make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not be waived
and shall apply to a successor holder of this Warrant.

 

  - 11 - 

 

 

(g)       Required Reserve Amount.  So long as this Warrant remains outstanding,
the Company shall at all times keep reserved for issuance under this Warrant a
number of shares of Common Stock at least equal to 100% of the maximum number of
shares of Common Stock as shall be necessary to satisfy the Company’s obligation
to issue shares of Common Stock under the Warrants then outstanding (without
regard to any limitations on exercise) (the “Required Reserve Amount”); provided
that at no time shall the number of shares of Common Stock reserved pursuant to
this Section 1(g) be reduced other than in connection with any exercise of
Warrants or such other event covered by Section 2(c) below.  The Required
Reserve Amount (including, without limitation, each increase in the number of
shares so reserved) shall be allocated pro rata among the holders of the
Warrants based on the number of shares of Common Stock issuable upon exercise of
Warrants held by each holder thereof on the Issuance Date (without regard to any
limitations on exercise) (the “Authorized Share Allocation”). In the event that
a holder shall sell or otherwise transfer any of such holder’s Warrants, each
transferee shall be allocated a pro rata portion of such holder’s Authorized
Share Allocation. Any shares of Common Stock reserved and allocated to any
Person that ceases to hold any Warrants shall be allocated to the remaining
holders of Warrants, pro rata based on the number of shares of Common Stock
issuable upon exercise of the Warrants then held by such holders thereof
(without regard to any limitations on exercise).

 

(h)       Insufficient Authorized Shares. If at any time while this Warrant
remains outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance the Required Reserve Amount (an “Authorized Share Failure”), then the
Company shall promptly take all action reasonably necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for this Warrant then
outstanding. Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than ninety (90) days after the occurrence of such
Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common
Stock. In connection with such meeting, the Company shall provide each
stockholder with a proxy statement and shall use its reasonable best efforts to
solicit its stockholders’ approval of such increase in authorized shares of
Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal. Notwithstanding the foregoing, if
any such time of an Authorized Share Failure, the Company is able to obtain the
written consent of a majority of the shares of its issued and outstanding shares
of Common Stock to approve the increase in the number of authorized shares of
Common Stock, the Company may satisfy this obligation by obtaining such consent
and submitting for filing with the SEC an Information Statement on Schedule 14C.

 

  - 12 - 

 

 

2.          ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
Exercise Price and the number of Warrant Shares shall be adjusted from time to
time as follows:

 

(a)       Adjustment Upon Issuance of Common Stock. If and whenever on or after
the Subscription Date, the Company issues or sells, or in accordance with this
Section 2 is deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or held by or
for the account of the Company, but excluding shares of Common Stock deemed to
have been issued or sold by the Company in connection with any Excluded
Securities) for a consideration per share (the “New Issuance Price”) less than a
price (the “Applicable Price”) equal to the Exercise Price in effect immediately
prior to such issuance or sale or deemed issuance or sale (the foregoing a
“Dilutive Issuance”), then immediately after such Dilutive Issuance, the
Exercise Price then in effect shall be reduced to an amount equal to the New
Issuance Price. For purposes of determining the adjusted Exercise Price under
this Section 2(a), the following shall be applicable:

 

(i)       Issuance of Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Options or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of any such
Options is less than the Applicable Price, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at
the time of the granting or sale of such Options for such price per share. For
purposes of this Section 2(a)(i), the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Options” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one share of Common Stock upon the granting or sale of the Options, upon
exercise of the Options and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Options less any
consideration paid or payable by the Company with respect to such one share of
Common Stock upon the granting or sale of such Options, upon exercise of such
Options and upon conversion exercise or exchange of any Convertible Security
issuable upon exercise of such Options. No further adjustment of the Exercise
Price shall be made upon the actual issuance of such shares of Common Stock or
of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such shares of Common Stock upon conversion, exercise or
exchange of such Convertible Securities.

 

(ii)       Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the lowest price per share for
which one share of Common Stock is issuable upon the conversion, exercise or
exchange thereof is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible Securities for
such price per share. For the purposes of this Section 2(a)(ii), the “lowest
price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof” shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the Company
with respect to any one share of Common Stock upon the issuance or sale of the
Convertible Security and upon conversion, exercise or exchange of such
Convertible Security less any consideration paid or payable by the Company with
respect to such one share of Common Stock upon the issuance or sale of such
Convertible Security and upon conversion, exercise or exchange of such
Convertible Security. No further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities, and if any such issuance or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustment of the Exercise Price has been or is to be made pursuant to
other provisions of this Section 2(a), no further adjustment of the Exercise
Price shall be made by reason of such issuance or sale.

 

  - 13 - 

 

 

(iii)       Change in Option Price or Rate of Conversion. If the purchase price
provided for in any Options, the additional consideration, if any, payable upon
the issue, conversion, exercise or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are convertible into or exercisable
or exchangeable for shares of Common Stock increases or decreases at any time
pursuant to the terms of such Options or Convertible Securities, the Exercise
Price in effect at the time of such increase or decrease shall be adjusted to
the Exercise Price, that would have been in effect at such time had such Options
or Convertible Securities provided for such increased or decreased purchase
price, additional consideration or increased or decreased conversion rate, as
the case may be, at the time initially granted, issued or sold. For purposes of
this Section 2(a)(iii), if the terms of any Option or Convertible Security that
was outstanding as of the Subscription Date are increased or decreased in the
manner described in the immediately preceding sentence, then such Option or
Convertible Security and the shares of Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have been issued as
of the date of such increase or decrease. No adjustment pursuant to this
Section 2(a) shall be made if such adjustment would result in an increase of the
Exercise Price then in effect. For the avoidance of doubt, no adjustment in the
Exercise Price shall be made pursuant to this Section 2(a)(iii) as a result of
any modification of the terms of any Options or Convertible Securities after
their date of issuance.

 

(iv)       Calculation of Consideration Received. In case any Option is issued
in connection with the issuance or sale of other securities of the Company,
together comprising one integrated transaction, (x) the Options will be deemed
to have been issued for the Option Value of such Options and (y) the other
securities issued or sold in such integrated transaction shall be deemed to have
been issued or sold for the difference of (I) the aggregate consideration
received by the Company less any consideration paid or payable by the Company
pursuant to the terms of such other securities of the Company, less (II) the
Option Value of such Options; provided, that if the value determined pursuant to
clause (y) above would result in a value less than the par value of the Common
Stock, then the other securities issued or sold in such integrated transaction
shall be deemed to have been issued or sold for the par value of the Common
Stock. If any shares of Common Stock, Options or Convertible Securities are
issued or sold or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount received by the Company
therefor. If any shares of Common Stock, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of such
consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of publicly traded
securities, in which case the amount of consideration received by the Company
will be the Closing Sale Price of such publicly traded securities on the date of
receipt of such publicly traded securities. If any shares of Common Stock,
Options or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor will be deemed to be the fair value
of such portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible Securities,
as the case may be. The fair value of any consideration other than cash or
publicly traded securities will be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement within ten
(10) days after the occurrence of an event requiring valuation (the “Valuation
Event”), the fair value of such consideration will be determined within five
(5) Business Days after the tenth (10th) day following the Valuation Event by an
independent, reputable appraiser jointly selected by the Company and the
Required Holders. The determination of such appraiser shall be final and binding
upon all parties absent manifest error and the fees and expenses of such
appraiser shall be borne by the Company.

 

  - 14 - 

 

 

(v)       Record Date. If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (A) to receive a dividend or other
distribution payable in shares of Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase shares of Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issuance 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.

 

(vi)       No Modification. So long as any of the Warrants are outstanding, the
Company shall not amend, modify or change the terms of any Options or
Convertible Securities (whether issued on, prior or after the Subscription Date)
to lower the exercise price or conversion price thereof.

 

(b)       Voluntary Adjustment by Company. The Company may at any time during
the term of this Warrant reduce the then current Exercise Price to any amount
and for any period of time deemed appropriate by the Board of Directors of the
Company.

 

(c)       Adjustment upon Subdivision or Combination of Common Stock. If the
Company at any time on or after the Subscription Date subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased. If
the Company at any time on or after the Subscription Date combines (by
combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately decreased.
Any adjustment under this Section 2(c) shall become effective at the close of
business on the date the subdivision or combination becomes effective.

 

3.           RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments
pursuant to Section 2 above, if, on or after the Subscription Date and on or
prior to the Expiration Date, the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the date on which
a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be
determined for the participation in such Distribution (provided, however, that
to the extent that the Holder’s right to participate in any such Distribution
would result in the Holder and the other Attribution Parties exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to such extent (and shall not be entitled to beneficial ownership
of such shares of Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time or times as its right
thereto would not result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, at which time or times the Holder shall be
granted such Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held similarly in
abeyance) to the same extent as if there had been no such limitation).

 

  - 15 - 

 

 

4.           PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)       Purchase Rights. In addition to any adjustments pursuant to Section 2
above, if at any time on or after the Subscription Date and on or prior to the
Expiration Date the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights that the Holder could
have acquired if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of Common Stock
are to be determined for the grant, issuance or sale of such Purchase Rights
(provided, however, that to the extent that the Holder’s right to participate in
any such Purchase Right would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (and shall not be entitled
to beneficial ownership of such Common Stock as a result of such Purchase Right
(and beneficial ownership) to such extent) and such Purchase Right to such
extent shall be held in abeyance for the benefit of the Holder until such time
or times as its right thereto would not result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, at which time or times the
Holder shall be granted such right (and any Purchase Right granted, issued or
sold on such initial Purchase Right or on any subsequent Purchase Right to be
held similarly in abeyance) to the same extent as if there had been no such
limitation).

 

(b)       Fundamental Transaction. The Company shall not enter into or be party
to a Fundamental Transaction unless the Successor Entity assumes in writing all
of the obligations of the Company under this Warrant in accordance with the
provisions of this Section 4(b), including agreements to deliver to the Holder
in exchange for this Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant,
including, without limitation, that is exercisable for a corresponding number of
shares of capital stock equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and with an
exercise price that applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such adjustments to the number of shares of capital
stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental
Transaction). Upon the consummation of each Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for the Company (so that
from and after the date of the applicable Fundamental Transaction, the
provisions of this Warrant and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations of the
Company under this Warrant with the same effect as if such Successor Entity had
been named as the Company herein. Upon consummation of each Fundamental
Transaction, the Successor Entity shall deliver to the Holder confirmation that
there shall be issued upon exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction, in lieu of the shares of
Common Stock (or other securities, cash, assets or other property (except such
items still issuable under Sections 3 and 4(a) above, which shall continue to be
receivable thereafter)) issuable upon the exercise of this Warrant prior to the
applicable Fundamental Transaction, such shares of common stock (or its
equivalent) of the Successor Entity (including its Parent Entity) that the
Holder would have been entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately prior to the
applicable Fundamental Transaction (without regard to any limitations on the
exercise of this Warrant), as adjusted in accordance with the provisions of this
Warrant. Notwithstanding the foregoing, and without limiting
Section 1(f) hereof, the Holder may elect, at its sole option, by delivery of
written notice to the Company to waive this Section 4(b) to permit the
Fundamental Transaction without the assumption of this Warrant. In addition to
and not in substitution for any other rights hereunder, prior to the
consummation of each Fundamental Transaction pursuant to which holders of shares
of Common Stock are entitled to receive securities or other assets with respect
to or in exchange for shares of Common Stock (a “Corporate Event”), the Company
shall make appropriate provision to insure that the Holder will thereafter have
the right to receive upon an exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction but prior to the
Expiration Date, in lieu of the shares of the Common Stock (or other securities,
cash, assets or other property (except such items still issuable under Sections
3 and 4(a) above, which shall continue to be receivable thereafter)) issuable
upon the exercise of the Warrant prior to such Fundamental Transaction, such
shares of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights) (collectively, the
“Corporate Event Consideration”) that the Holder would have been entitled to
receive upon the happening of the applicable Fundamental Transaction had this
Warrant been exercised immediately prior to the applicable Fundamental
Transaction (without regard to any limitations on the exercise of this Warrant).
The provision made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Holder. The provisions of this
Section 4(b) shall apply similarly and equally to successive Fundamental
Transactions and Corporate Events. Notwithstanding the foregoing, in the event
of a Change of Control, at the request of the Holder delivered before the 30th
day after such Change of Control, the Company (or the Successor Entity) shall
purchase this Warrant from the Holder by paying to the Holder, within five
(5) Business Days after such request (or, if later, on the effective date of the
Change of Control), an amount equal to the Black Scholes Value of the remaining
unexercised portion of this Warrant on the effective date of such Change of
Control, payable in cash; provided, however, that, if the Change of Control is
not within the Company’s control, including not approved by the Company’s Board
of Directors, the Holder shall only be entitled to receive from the Company or
any Successor Entity, as of the date of consummation of such Change of Control,
the same type or form of consideration (and in the same proportion), at the
Black Scholes Value of the unexercised portion of this Warrant, that is being
offered and paid to the holders of Common Stock of the Company in connection
with the Change of Control, whether that consideration be in the form of cash,
stock or any combination thereof, or whether the holders of Common Stock are
given the choice to receive from among alternative forms of consideration in
connection with the Change of Control.

 

  - 16 - 

 

 

5.           NONCIRCUMVENTION. The Company hereby covenants and agrees that the
Company will not, by amendment of its Certificate of Incorporation or Bylaws, or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, dissolution, issuance 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, and will at all times in good faith carry out all of the
provisions of this Warrant and take all action as may be required to protect the
rights of the Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, (ii) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and
(iii) shall, so long as any of the Warrants are outstanding, take all action
necessary to reserve and keep available out of its authorized and unissued
shares of Common Stock, solely for the purpose of effecting the exercise of the
Warrants, the number of shares of Common Stock as shall from time to time be
necessary to effect the exercise of the Warrants then outstanding (without
regard to any limitations on exercise).

 

6.            WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise
specifically provided herein, 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 capital stock 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, 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 that 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 (upon exercise of this
Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.
Notwithstanding this Section 6, the Company shall provide the Holder with copies
of the same notices and other information given to the stockholders of the
Company generally, contemporaneously with the giving thereof to the
stockholders.

 

7.            REISSUANCE OF WARRANTS.

 

(a)       Transfer of Warrant. If this Warrant is to be transferred, the Holder
shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less than the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.

 

  - 17 - 

 

 

(b)       Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant, and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary
form (but without the obligation to post a bond) and, in the case of mutilation,
upon surrender and cancellation of this Warrant, the Company shall execute and
deliver to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then underlying this
Warrant.

 

(c)       Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon
the surrender hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender.

 

(d)       Issuance of New Warrants. If this Warrant is not held in global form
through DTC (or any successor depository), whenever the Company is required to
issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated
on the face of such new Warrant, the right to purchase the Warrant Shares then
underlying this Warrant (or in the case of a new Warrant being issued pursuant
to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder
that, when added to the number of shares of Common Stock underlying the other
new Warrants issued in connection with such issuance, does not exceed the number
of Warrant Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant that is the same as the
Issuance Date, and (iv) shall have the same rights and conditions as this
Warrant.

 

(e)       Warrant Register. If this Warrant is held in global form through DTC
(or any successor depository), the Warrant Agent shall register this Warrant,
upon records to be maintained by the Warrant Agent for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time.
If this Warrant is not held in global form through DTC (or any successor
depository), the Company and the Warrant Agent 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.

 

8.            NOTICES. Whenever notice is required to be given under this
Warrant, including, without limitation, an Exercise Notice, unless otherwise
provided herein, such notice shall be given in writing, (i) if delivered
(a) from within the domestic United States, by first-class registered or
certified airmail, or nationally recognized overnight express courier, postage
prepaid, electronic mail or by facsimile or (b) from outside the United States,
by International Federal Express, electronic mail or facsimile, and (ii) will be
deemed given (A) if delivered by first-class registered or certified mail
domestic, three (3) Business Days after so mailed, (B) if delivered by
nationally recognized overnight carrier, one (1) Business Day after so mailed,
(C) if delivered by International Federal Express, two (2) Business Days after
so mailed and (D) at the time of transmission, if delivered by electronic mail
to each of the email addresses specified in this Section 8 prior to 5:00
p.m. (New York time) on a Trading Day, (E) the next Trading Day after the date
of transmission, if delivered by electronic mail to each of the email addresses
specified in this Section 8 on a day that is not a Trading Day or later than
5:00 p.m. (New York time) on any Trading Day and (F) if delivered by facsimile,
upon electronic confirmation of receipt of such facsimile, and will be delivered
and addressed as follows:

 

(i)       if to the Company, to:

Outlook Therapeutics, Inc.
7 Clarke Drive
Cranbury, NJ 08512
Attn: Lawrence A. Kenyon

 

(ii) if to the Holder, at such address or other contact information delivered by
the Holder to Company or as is on the books and records of the Company.

 

  - 18 - 

 

 

The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Warrant, including in reasonable detail a description of
such action and the reason therefor. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Exercise Price, setting forth in reasonable detail,
and certifying, the calculation of such adjustment and (ii) at least fifteen
(15) days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the shares of
Common Stock, (B) with respect to any grants, issuances or sales of any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property to holders of shares of Common Stock or (C) for determining
rights to vote with respect to any Fundamental Transaction, dissolution or
liquidation; provided in each case that such information shall be made known to
the public prior to or in conjunction with such notice being provided to the
Holder. It is expressly understood and agreed that the time of exercise
specified by the Holder in each Exercise Notice shall be definitive and may not
be disputed or challenged by the Company.

 

9.            AMENDMENT AND WAIVER. Except as otherwise provided herein, the
provisions of this Warrant may be amended or waived 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.

 

10.          GOVERNING LAW; JURISDICTION; JURY TRIAL. This Warrant shall be
governed by and construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this
Warrant shall be governed by, the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York. The Company 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, 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, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. The Company 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 to the Company at the address set forth in
Section 8(i) above or such other address as the Company subsequently delivers to
the Holder 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.
Nothing contained herein shall be deemed or operate to preclude the Holder from
bringing suit or taking other legal action against the Company in any other
jurisdiction to collect on the Company’s obligations to the Holder, to realize
on any collateral or any other security for such obligations, or to enforce a
judgment or other court ruling in favor of the Holder. If either party shall
commence an action, suit or proceeding to enforce any provisions of this
Warrant, the prevailing party in such action, suit or proceeding shall be
reimbursed by the other party for their reasonable attorneys’ fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT
MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

11.          DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares, the Company shall submit the disputed determinations or arithmetic
calculations via facsimile or electronic mail within two (2) Business Days of
receipt of the Exercise Notice or other event giving rise to such dispute, as
the case may be, to the Holder. If the Holder and the Company are unable to
agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within three (3) Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within two (2) Business Days submit via facsimile or electronic mail (a) the
disputed determination of the Exercise Price to an independent, reputable
investment bank selected by the Company and approved by the Holder or (b) the
disputed arithmetic calculation of the Warrant Shares to the Company’s
independent, outside accountant. The Company shall cause at its expense the
investment bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the Holder of the
results no later than ten (10) Business Days from the time it receives the
disputed determinations or calculations. Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.

 

  - 19 - 

 

 

12.        REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and any other Transaction Documents,
at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder to
pursue actual damages for any failure by the Company to comply with the terms of
this Warrant. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available  remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.

 

13.        TRANSFER. This Warrant and the Warrant Shares may be offered for
sale, sold, transferred, pledged or assigned without the consent of the Company.

 

14.        SEVERABILITY; CONSTRUCTION; HEADINGS. If any provision of this
Warrant is prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision that would
otherwise be prohibited, invalid or unenforceable shall be deemed amended to
apply to the broadest extent that it would be valid and enforceable, and the
invalidity or unenforceability of such provision shall not affect the validity
of the remaining provisions of this Warrant so long as this Warrant as so
modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature,
invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s). This Warrant shall be deemed
to be jointly drafted by the Company and the Holder and shall not be construed
against any Person as the drafter hereof. The headings of this Warrant are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant.

 

15.       DISCLOSURE. Upon receipt or delivery by the Company of any notice in
accordance with the terms of this Warrant, unless the Company has in good faith
determined that the matters relating to such notice do not constitute material,
nonpublic information relating to the Company or its subsidiaries, the Company
shall contemporaneously with any such receipt or delivery publicly disclose such
material, nonpublic information on a Current Report on Form 8-K or otherwise. In
the event that the Company believes that a notice contains material, nonpublic
information relating to the Company or its subsidiaries, the Company so shall
indicate to such Holder contemporaneously with delivery of such notice, and in
the absence of any such indication, the Holder shall be allowed to presume that
all matters relating to such notice do not constitute material, nonpublic
information relating to the Company or its subsidiaries.

 

16.       WARRANT AGENT AGREEMENT. If this Warrant is held in global form
through DTC (or any successor depositary), this Warrant is issued subject to the
Warrant Agent Agreement. To the extent any provision of this Warrant conflicts
with the express provisions of the Warrant Agent Agreement, the provisions of
this Warrant shall govern and be controlling.

 

17.       CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms
shall have the following meanings:

 

(a)       “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
“control” of a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election  of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

 

 - 20 - 

 

 

(b)       “Approved Stock Plan” means any employee benefit plan that has been
approved by a majority of the disinterested members of the Board of Directors of
the Company, pursuant to which the Company’s securities may be issued to any
employee, officer or director for services provided to the Company.

 

(c)       “Attribution Parties” means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Subscription Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company’s Common
Stock would or could be aggregated with the Holder’s and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.

 

(d)       “Bid Price” means, for any security as of the particular time of
determination, the bid price for such security on the Principal Market as
reported by Bloomberg as of such time of determination, or, if the Principal
Market is not the principal securities exchange or trading market for such
security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
as of such time of determination, or if the foregoing does not apply, the bid
price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg as of such time of
determination, or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any market
makers for such security as reported in the “pink sheets” by OTC Markets Group
Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid
Price cannot be calculated for a security as of the particular time of
determination on any of the foregoing bases, the Bid Price of such security as
of such time of determination 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 such dispute
shall be resolved in accordance with the procedures in Section 11. All such
determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period.

 

(e)       “Black Scholes Value” means the value of this Warrant based on the
Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg
determined as of the day immediately following the first public announcement of
the applicable Change of Control, or, if the Change of Control is not publicly
announced, the date the Change of Control is consummated, for pricing purposes
and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of such date of
request, (ii) an expected volatility equal to 100%, (iii) the underlying price
per share used in such calculation shall be the greater of (a) the highest
Weighted Average Price during the five (5) Trading Days prior to the closing of
the Change of Control and (b) the sum of the price per share  being offered in
cash, if any, plus the value of any non-cash consideration, if any, being
offered in such Change of Control, (iv) a zero cost of borrow and (v) a 360 day
annualization factor.

 

 - 21 - 

 

 

(f)       “Bloomberg” means Bloomberg Financial Markets.

 

(g)       “Business Day” means any day other than Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or required by
law to remain closed.

 

(h)       “Change of Control” means any Fundamental Transaction other than
(i) any reorganization, recapitalization or reclassification of the Common Stock
in which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respect, the
holders of the voting power of the surviving entity (or entities with the
authority or voting power to elect the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities) after
such reorganization, recapitalization or reclassification, (ii) pursuant to a
migratory merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company or (iii) a merger in connection with a bona fide
acquisition by the Company of any Person in which (x) the gross consideration
paid, directly or indirectly, by the Company in such acquisition is not greater
than 40% of the Company’s market capitalization as calculated on the date of the
consummation of such merger and (y) such merger does not contemplate a change to
the identity of a majority of the board of directors of the Company.
Notwithstanding anything herein to the contrary, any transaction or series of
transaction that, directly or indirectly, results in the Company or the
Successor Entity not having Common Stock or common stock, as applicable,
registered under the 1934 Act and listed on an Eligible Market shall be deemed a
Change of Control.

 

(i)       “Closing Bid Price” and “Closing Sale Price” means, for any security
as of any date, the last closing bid price and last closing trade price,
respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the OTC Link
or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, 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 such dispute shall be resolved pursuant to
Section 11. All such  determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or other similar
transaction during the applicable calculation period.

 

 - 22 - 

 

 

(j)       “Common Stock” means (i) the Company’s Common Stock, par value $0.01
per share, and (ii) any capital stock into which such Common Stock shall have
been changed or any capital stock resulting from a reclassification of such
Common Stock.

 

(k)       “Convertible Securities” means any stock or securities (other than
Options) directly or indirectly convertible into or exercisable or exchangeable
for shares of Common Stock.

 

(l)       “Eligible Market” means The NASDAQ Capital Market, the NYSE American
LLC, The NASDAQ Global Select Market, The NASDAQ Global Market or The New York
Stock Exchange, Inc.

 

(m)       “Excluded Securities” means any shares of Common Stock issued or
issuable, or deemed issued or issuable pursuant to Section 2(a): (i) in
connection with any Approved Stock Plan, including, for the avoidance of doubt,
the issuance of equity awards (including Options or Convertible Securities)
pursuant to any such Approved Stock Plan after the Subscription Date, (ii) upon
exercise of the Warrants, (iii) upon conversion, exercise, exchange or
settlement of any Options or Convertible Securities that are outstanding on the
day immediately preceding the Subscription Date, including, for the avoidance of
doubt, the issuance of equity awards (including Options or Convertible
Securities) pursuant to any such Approved Stock Plan after the Subscription
Date, (iv) upon the issuance of “payment-in-kind” dividends of additional shares
of the Company’s Series A-1 Convertible Preferred Stock, as contemplated by the
terms thereof, and (v) pursuant to acquisitions, divestitures, licenses,
partnerships, collaborations or strategic transactions approved by the Board of
Directors or a majority of the members of a committee of directors established
for such purposes; provided that any such issuance shall only be to a Person (or
to the equity holders of a Person) that is, itself or through its subsidiaries,
an operating company or an asset in a business synergistic with the business of
the Company and shall provide to the Company additional benefits in addition to
the investment of funds, but shall not include a transaction in which the
Company is issuing securities primarily for the purpose of raising capital or to
an entity whose primary business is investing in securities.

 

(n)       “Expiration Date” means the date sixty (60) months after the Initial
Exercisability Date or, if such date falls on a day other than a Business Day or
on which trading does not take place on the Principal Market (a “Holiday”), the
next day that is not a Holiday.

 

 - 23 - 

 

 

(o)       “Fundamental Transaction” means (A) that the Company shall, directly
or indirectly, including through subsidiaries, Affiliates or otherwise, in one
or more related transactions, (i) consolidate or merge with or into (whether or
not the Company is the surviving corporation) another Subject Entity, or
(ii) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company or any of its “significant
subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject
Entities, or (iii) make, or allow one or more Subject Entities to make, or allow
the Company to be subject to or have its shares of Common Stock be subject to or
party to one or more Subject Entities making, a purchase, tender or exchange
offer that is accepted by the holders of at least either (x) 50% of the
outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common
Stock calculated as if any shares of Common Stock held by all Subject Entities
making or party to, or Affiliated with any Subject Entities making or party to,
such purchase, tender or exchange offer were not outstanding; or (z) such number
of shares of Common Stock such that all Subject Entities making or party to, or
Affiliated with any Subject Entity making or party to, such purchase, tender or
exchange offer, become collectively the beneficial owners (as defined in
Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of
Common Stock, or (iv) consummate a stock purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby all
such Subject Entities, individually or in the aggregate, acquire, either (x) at
least 50% of the outstanding shares of Common Stock, (y) at least 50% of the
outstanding shares of Common Stock calculated as if any shares of Common Stock
held by all the Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such stock purchase agreement or other
business combination were not outstanding; or (z) such number of shares of
Common Stock such that the Subject Entities become collectively the beneficial
owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the
outstanding shares of Common Stock, or (v) reorganize, recapitalize or
reclassify its shares of Common Stock, (B) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or the Subject
Entities in the aggregate to be or become the “beneficial owner” (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, whether through
acquisition, purchase, assignment, conveyance, tender, tender offer, exchange,
reduction in outstanding shares of Common Stock, merger, consolidation, business
combination, reorganization, recapitalization, spin-off, scheme of arrangement,
reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock, (y) at least 50%
of the aggregate ordinary voting power represented by issued and outstanding
shares of Common Stock not held by all such Subject Entities as of the
Subscription Date calculated as if any shares of Common Stock held by all such
Subject Entities were not outstanding, or (z) a percentage of the aggregate
ordinary voting power represented by issued and outstanding shares of Common
Stock or other equity securities of the Company sufficient to allow such Subject
Entities to effect a statutory short form merger or other transaction requiring
other stockholders of the Company to surrender their Common Stock without
approval of the stockholders of the Company or (C) directly or indirectly,
including through subsidiaries, Affiliates or otherwise, in one or more related
transactions, the issuance of or the entering into any other instrument or
transaction structured in a manner to circumvent, or that circumvents, the
intent of this definition in which case this definition shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of
this definition to the extent necessary to correct this definition or any
portion of this definition that may be defective or inconsistent with the
intended treatment of such instrument or transaction.

 

(p)       “Group” means a “group” as that term is used in Section 13(d) of the
1934 Act and as defined in Rule 13d-5 thereunder.

 

 - 24 - 

 

 

(q)       “Option Value” means the value of an Option based on the Black-Scholes
Option Pricing model obtained from the “OV” function on Bloomberg determined as
of the day of the most recent Closing Sale Price of the Common Stock prior to
the public announcement of the pricing of the applicable Option (or, if the
pricing is not publicly announced, on the most recent Closing Sale Price of the
Common Stock prior to the pricing of the applicable Option) and reflecting (i) a
risk-free interest rate corresponding to the U.S. Treasury rate for a period
equal to the remaining term of the applicable Option as of the applicable date
of determination, (ii) an expected volatility equal to 50%, (iii) an underlying
price per share equal to the most recent Closing Sale Price of the Common Stock
prior to the public announcement of the pricing of the applicable Option (or, if
the pricing is not publicly announced, on the most recent Closing Sale Price of
the Common Stock prior to the pricing of the applicable Option), (iv) a zero
cost of borrow and (v) a 360-day annualization factor.

 

(r)       “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

 

(s)       “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person, including such entity whose common
stock or equivalent equity security is quoted or listed on an Eligible Market
(or, if so elected by the Holder, any other market, exchange or quotation
system), or, if there is more than one such Person or such entity, the Person or
such entity designated by the Holder or in the absence of such designation, such
Person or entity with the largest public market capitalization as of the date of
consummation of the Fundamental Transaction or Change of Control.

 

(t)       “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.

 

(u)       “Principal Market” means the principal securities exchange or
securities market on which the Common Stock is then traded.

 

(v)       “Required Holders” means the holders of the Warrants representing at
least a majority of the shares of Common Stock underlying the Warrants then
outstanding.

 

(w)       “Standard Settlement Period” means the standard settlement period,
expressed in a number of Trading Days, for the Company’s primary trading market
or quotation system with respect to the Common Stock that is in effect on the
date of receipt of an applicable Exercise Notice.

 

(x)       “Subject Entity” means any Person, Persons or Group or any Affiliate
or associate of any such Person, Persons or Group.

 

(y)       “Successor Entity” means one or more Person or Persons (or, if so
elected by the Holder, the Company or Parent Entity) formed by, resulting from
or surviving any Fundamental Transaction or Change of Control or one or more
Person or Persons (or, if so elected by the Holder, the Company or the Parent
Entity) with which such Fundamental Transaction or Change of Control shall have
been entered into.

 

(z)       “Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded.

 

 - 25 - 

 

  

(aa) “Transaction Documents” means any agreement entered into by and between the
Company and the Holder, as applicable.

 

(bb) “Warrant Agent Agreement” means that certain Warrant Agent Agreement, dated
as of the Initial Exercise Date, between the Company and the Warrant Agent.

 

(cc) “Warrant Agent” means American Stock Transfer & Trust Company, LLC, a New
York limited liability trust company.

 

(dd) “Weighted Average Price” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market during
the period beginning at 9:30:01 a.m., New York time (or such other time as the
Principal Market publicly announces is the official open of trading), and ending
at 4:00:00 p.m., New York time (or such other time as the Principal Market
publicly announces is the official close of trading), as reported by Bloomberg
through its “Volume at Price” function or, if the foregoing does not apply, the
dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period
beginning at 9:30:01 a.m., New York time (or such other time as such market
publicly announces is the official open of trading), and ending at 4:00:00 p.m.,
New York time (or such other time as such market publicly announces is the
official close of trading), as reported by Bloomberg, or, if no dollar
volume-weighted average price is reported for such security by Bloomberg for
such hours, the average of the highest Closing Bid Price and the lowest closing
ask price of any of the market makers for such security as reported in the OTC
Link or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets
Inc.). If the Weighted Average Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Weighted Average 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 such dispute shall be resolved
pursuant to Section 11 with the term “Weighted Average Price” being substituted
for the term “Exercise Price.” All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination,
reclassification or other similar transaction during the applicable calculation
period.

 

[Signature Page Follows]

 

 - 26 - 

 

 

IN WITNESS WHEREOF, the Company has caused this Five-Year Warrant to Purchase
Common Stock to be duly executed as of the Issuance Date set out above.

  

  OUTLOOK THERAPEUTICS, INC.        

 

  By:       Name:       Title:    

 

 

   

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

 FIVE-YEAR WARRANT TO PURCHASE COMMON STOCK

 

 

OUTLOOK THERAPEUTICS, INC.

 

The undersigned holder hereby exercises the right to
purchase                                    shares of Common Stock (“Warrant
Shares”) of Outlook Therapeutics, Inc., a company organized under the laws of
Delaware (the “Company”), evidenced by the attached Five-Year Warrant to
Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

 

1. Form of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as:

 

                                                           a “Cash Exercise”
with respect
to                                                                     Warrant
Shares; and/or

 

                                                          a “Cashless Exercise”
with respect to
                                                                        
  Warrant Shares.

 

2. Payment of Exercise Price. In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$                                to the Company in accordance with the terms of
the Warrant.

 

3. Delivery of Warrant Shares. The Company shall deliver to the holder
                             Warrant Shares in accordance with the terms of the
Warrant.

  

 

 

Date:                                         ,                

 

  

  Name of Registered Holder           By:     Name:   Title:  

 

  

 

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs American
Stock Transfer & Trust Company, LLC to issue the above indicated number of
shares of Common Stock on or prior to the applicable Share Delivery Date.

 

  OUTLOOK THERAPEUTICS, INC.           By:     Name:   Title:

 

 - 27 - 

 

  

Exhibit D

 

 

[FORM OF CERTIFICATED 15-MONTH WARRANT]

 

OUTLOOK THERAPEUTICS, INC

 

15-MONTH WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.:                             

 Number of Shares of Common Stock:                               

 Date of Issuance: April 12, 2019 (“Issuance Date”)

 

Outlook Therapeutics, Inc., a company organized under the laws of Delaware (the
“Company”), hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, [HOLDER], the
registered holder hereof or its permitted assigns (the “Holder”), is entitled,
subject to the terms set forth below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, at any time or times on or
after April 12, 2019 (the “Initial Exercisability Date”), but not after 11:59
p.m., New York time, on the Expiration Date, (as defined below),
                          (                          ) fully paid non-assessable
shares of Common Stock (as defined below), subject to adjustment as provided
herein (the “Warrant Shares”). Except as otherwise defined herein, capitalized
terms in this Warrant to Purchase Common Stock (including any Warrants to
Purchase Common Stock issued in exchange, transfer or replacement hereof, this
“Warrant”), shall have the meanings set forth in Section 16. This Warrant is one
of the 15-Month Warrants to Purchase Common Stock (the “Warrants”) issued
pursuant to (i) that certain Underwriting Agreement, dated as of April 10, 2019
(the “Subscription Date”) by and between the Company and Oppenheimer & Co. Inc.
as representative of the several underwriters named therein, (ii) the Company’s
Registration Statement on Form S-1 (File number 333-229761) (together with the
additional registration statement filed by the Company pursuant to
Rule 462(b) of the 1933 Act (as defined below) the “Registration Statement”).
This Warrant shall initially be issued and maintained in the form of a security
held in book-entry form and the Depository Trust Company or its nominee (“DTC”)
shall initially be the sole registered holder of this Warrant, subject to a
Holder’s right to elect to receive a Warrant in certificated form pursuant to
the terms of the Warrant Agent Agreement, in which case this sentence shall not
apply.

 

 - 28 - 

 

 

1.       EXERCISE OF WARRANT.

 

(a)       Mechanics of Exercise. Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder at any time or times on or after the
Initial Exercisability Date, in whole or in part, by delivery (whether via
facsimile, electronic mail or otherwise) of a written notice, in the form
attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election
to exercise this Warrant. Within one (1) Trading Day following the delivery of
the Exercise Notice, the Holder shall make payment to the Company of an amount
equal to the Exercise Price in effect on the date of such exercise multiplied by
the number of Warrant Shares as to which this Warrant is being exercised (the
“Aggregate Exercise Price”) in cash by wire transfer of immediately
available funds or, if the provisions of Section 1(d) are applicable, by
notifying the Company that this Warrant is being exercised pursuant to a
Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required
to deliver the original Warrant in order to effect an exercise hereunder, nor
shall any ink-original signature or medallion guarantee (or other type of
guarantee or notarization) with respect to any Exercise Notice be required.
Execution and delivery of the Exercise Notice with respect to less than all of
the Warrant Shares 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 and the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder has purchased
all of the Warrant Shares available hereunder and the Warrant has been exercised
in full, in which case, the Holder shall surrender this Warrant to the Company
for cancellation within three (3) Trading Days of the date on which the final
Exercise Notice is delivered to the Company. On or before the first (1st)
Trading Day following the date on which the Holder has delivered the applicable
Exercise Notice, the Company shall transmit by facsimile or electronic mail an
acknowledgment of confirmation of receipt of the Exercise Notice, in the form
attached to the Exercise Notice, to the Holder and the Company’s transfer agent
(the “Transfer Agent”). So long as the Holder delivers the Aggregate Exercise
Price (or notice of a Cashless Exercise, if applicable) on or prior to the first
(1st) Trading Day following the date on which the Exercise Notice has been
delivered to the Company, then on or prior to the earlier of (i) the second
(2nd) Trading Day and (ii) the number of Trading Days comprising the Standard
Settlement Period, in each case following the date on which the Exercise Notice
has been delivered to the Company, or, if the Holder does not deliver the
Aggregate Exercise Price (or notice of a Cashless Exercise, if applicable) on or
prior to the first (1st) Trading Day following the date on which the Exercise
Notice has been delivered to the Company, then on or prior to the first (1st)
Trading Day following the date on which the Aggregate Exercise Price (or notice
of a Cashless Exercise) is delivered (such earlier date, or if later, the
earliest day on which the Company is required to deliver Warrant Shares pursuant
to this Section 1(a), the “Share Delivery Date”), the Company shall (X) provided
that the Transfer Agent is participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program, credit such aggregate number of
Warrant Shares to which the Holder is entitled pursuant to such exercise to the
Holder’s or its designee’s balance account with DTC through its Deposit /
Withdrawal At Custodian system, or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and
dispatch by overnight courier to the address or e-mail address as specified in
the Exercise Notice, evidence of credit of book-entry shares, registered in the
name of the Holder or its designee, for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise. If the Company fails for any
reason to deliver to such registered holder or Participant, as the case may be,
the Warrant Shares subject to an exercise notice by the Share Delivery Date, the
Company shall pay to the registered holder, in cash, as liquidated damages and
not as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the Weighted Average Price of the Common Stock on the date of the
applicable exercise notice), $10 per Trading Day (increasing to $20 per Trading
Day on the fifth Trading Day after such liquidated damages begin to accrue) for
each Trading Day after such Share Delivery Date until such Warrant Shares are
delivered or the registered holder rescinds such exercise. The Company shall be
responsible for all fees and expenses of the Transfer Agent and all fees and
expenses with respect to the issuance of Warrant Shares via DTC, if any,
including without limitation for same day processing. Upon delivery of the
Exercise Notice, the Holder shall be deemed for all corporate purposes to have
become the holder of record and beneficial owner of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective of the date
such Warrant Shares are credited to the Holder’s DTC account or the date of
delivery of the certificates evidencing such Warrant Shares, as the case may be.
If this Warrant is physically delivered to the Company in connection with any
exercise pursuant to this Section 1(a) and the number of Warrant Shares
represented by this Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise, then the Company shall as soon
as practicable and in no event later than three (3) Trading Days after any
exercise and at its own expense, issue and deliver to the Holder (or its
designee) a new Warrant (in accordance with Section 7(d)) representing the right
to purchase the number of Warrant Shares issuable immediately prior to such
exercise under this Warrant, less the number of Warrant Shares with respect to
which this Warrant is exercised. No fractional Warrant Shares are to be issued
upon the exercise of this Warrant, but rather the Company shall pay a cash
adjustment equal to such fraction multiplied by the Exercise Price. The Company
shall pay any and all transfer, stamp, issuance and similar taxes, costs and
expenses (including, without limitation, fees and expenses of the Transfer
Agent) that may be payable with respect to the issuance and delivery of Warrant
Shares upon exercise of this Warrant. The Company’s obligations to issue and
deliver Warrant Shares in accordance with the terms and subject to the
conditions 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; provided, however, that the Company shall not be required to
deliver Warrant Shares with respect to an exercise prior to the Holder’s
delivery of the Aggregate Exercise Price (or notice of a Cashless Exercise) with
respect to such exercise.

 

 - 29 - 

 

 

(b)       Exercise Price. For purposes of this Warrant, “Exercise Price” means
$2.90 per share, subject to adjustment as provided herein.

 

(c)       Company’s Failure to Timely Deliver Securities. If either (I) the
Company shall fail for any reason or for no reason on or prior to the applicable
Share Delivery Date, if (x) the Transfer Agent is not participating in the DTC
Fast Automated Securities Transfer Program, to issue to the Holder by book-entry
credit the number of shares of Common Stock to which the Holder is entitled and
register such Common Stock on the Company’s share register or (y) the Transfer
Agent is participating in the DTC Fast Automated Securities Transfer Program, to
credit the Holder’s balance account with DTC, for such number of shares of
Common Stock to which the Holder is entitled upon the Holder’s exercise of this
Warrant or (II) a registration statement (which may be the Registration
Statement) covering the issuance or resale of the Warrant Shares that are the
subject of the Exercise Notice (the “Exercise Notice Warrant Shares”) is not
available for the issuance or resale, as applicable, of such Exercise Notice
Warrant Shares and (x) the Company fails to promptly, but in no event later than
one (1) Business Day after such registration statement becomes unavailable, to
so notify the Holder and (y) the Company is unable to deliver the Exercise
Notice Warrant Shares electronically without any restrictive legend by crediting
such aggregate number of Exercise Notice Warrant Shares to the Holder’s or its
designee’s balance account with DTC through its Deposit / Withdrawal At
Custodian system (the event described in the immediately foregoing clause
(II) is hereinafter referred to as a “Notice Failure” and, together with the
event described in clause (I) above, an “Exercise Failure”), then, in addition
to all other remedies available to the Holder, if on or prior to the applicable
Share Delivery Date either (I) if the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, the Company shall fail to issue
by book-entry credit to the Holder and register such shares of Common Stock on
the Company’s share register or, if the Transfer Agent is participating in the
DTC Fast Automated Securities Transfer Program, credit the Holder’s balance
account with DTC for the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise hereunder or pursuant to the Company’s
obligation pursuant to clause (ii) below or (II) a Notice Failure occurs, and if
on or after such Trading Day the Holder is required by its broker to purchase
(in an open market transaction or otherwise) or the Holder’s brokerage firm
otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale
by the Holder of the Warrant Shares that the Holder anticipated receiving upon
such exercise from the Company (a “Buy-In”), then the Company shall (A) pay in
cash to the Holder the amount, if any, by which (x) the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any)
for the shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (1) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having a total
purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss. Nothing herein shall limit a Holder’s 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 Company’s failure to timely credit by book
entry the Warrant Shares (or to electronically deliver such Warrant Shares) upon
the exercise of this Warrant as required pursuant to the terms hereof. While
this Warrant is outstanding, the Company shall cause its transfer agent to
participate in the DTC Fast Automated Securities Transfer Program. In addition
to the foregoing rights, (i) if the Company fails to deliver the applicable
number of Warrant Shares upon an exercise pursuant to Section 1 by the
applicable Share Delivery Date, then the Holder shall have the right to rescind
such exercise in whole or in part and retain and/or have the Company return, as
the case may be, any portion of this Warrant that has not been exercised
pursuant to such Exercise Notice; provided that the rescission of an exercise
shall not affect the Company’s obligation to make any payments that have accrued
prior to the date of such notice pursuant to this Section 1(c) or otherwise, and
(ii) if a registration statement (which may be the Registration Statement)
covering the issuance or resale of the Warrant Shares that are subject to an
Exercise Notice is not available for the issuance or resale, as applicable, of
such Exercise Notice Warrant Shares and the Holder has submitted an Exercise
Notice prior to receiving notice of the non-availability of such registration
statement and the Company has not already delivered the Warrant Shares
underlying such Exercise Notice electronically without any restrictive legend by
crediting such aggregate number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the Holder’s or its designee’s balance
account with DTC through its Deposit / Withdrawal At Custodian system, the
Holder shall have the option, by delivery of notice to the Company, to
(x) rescind such Exercise Notice in whole or in part and retain or have
returned, as the case may be, any portion of this Warrant that has not been
exercised pursuant to such Exercise Notice; provided that the rescission of an
Exercise Notice shall not affect the Company’s obligation to make any payments
that have accrued prior to the date of such notice pursuant to this
Section 1(c) or otherwise, and/or (y) switch some or all of such Exercise Notice
from a cash exercise to a Cashless Exercise.

 

 - 30 - 

 

 

(d)       Cashless Exercise. A Cashless Exercise (as defined below) may occur
(i) in the case of the 15-Month Warrants only, in whole or in part for a number
of whole Warrant Shares, after May 12, 2019 (the “Cashless Date”), if the
Weighted Average Price of the Common Stock on any single Trading Day on or after
the Cashless Date and prior to the date of such Cashless Exercise fails to
exceed the Exercise Price in effect as of the date hereof (subject to adjustment
for any stock splits, stock dividends, stock combinations, recapitalizations and
similar events) in which event, in lieu of the formula below, the aggregate
number of Warrant Shares issuable in such cashless exercise pursuant to any
given Exercise Notice electing to effect a Cashless Exercise shall equal the
product of (x) the aggregate number of Warrant Shares for which the Warrants are
exercised as if such exercise were by means of a cash exercise rather than a
Cashless Exercise and (y) 0.60; and (ii) if a registration statement (which may
be the Registration Statement) covering the issuance or resale of the Exercise
Notice Warrant Shares is not available for the issuance or resale, as
applicable, of such Exercise Notice Warrant Shares, the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the “Net Number” of shares of Common Stock determined according to 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 of shares with respect to which this Warrant is then being
exercised.

 

B=   as applicable: (i) the Closing Sale Price of the Common Stock on the
Trading Day immediately preceding the date of the applicable Exercise Notice if
such Exercise Notice is (1) both executed and delivered pursuant to
Section 1(a) hereof on a day that is not a Trading Day or (2) both executed and
delivered pursuant to Section 1(a) hereof on a Trading Day prior to the opening
of “regular trading hours” (as defined in Rule 600(b)(64) of Regulation NMS
promulgated under the federal securities laws) on such Trading Day, (ii) at the
option of the Holder, either (y) the Weighted Average Price on the Trading Day
immediately preceding the date of the applicable Notice of Exercise or (z)  the
Bid Price of the Common Stock as of the time of the Holder’s execution of the
applicable Exercise Notice if such Exercise Notice is executed during “regular
trading hours” on a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular trading hours” on a
Trading Day) pursuant to Section 1(a) hereof or (iii) the Closing Sale Price of
the Common Stock on the date of the applicable Exercise Notice if the date of
 such Exercise Notice is a Trading Day and such Exercise Notice is both executed
and delivered pursuant to Section 1(a) hereof after the close of “regular
trading hours” on such Trading Day.

 

 - 31 - 

 

 

C= the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

The Company agrees to make all calculations related to a Cashless Exercise and
will provide the Warrant Agent with issuance instructions.

 

If Warrant Shares are issued in such a cashless exercise, the Company
acknowledges and agrees that in accordance with Section 3(a)(9) of the 1933 Act,
the Warrant Shares shall take on the registered characteristics of the Warrants
being exercised, and the holding period of the Warrants being exercised may be
tacked on to the holding period of the Warrant Shares. The Company agrees not to
take any position contrary to this Section 1(d). Without limiting the rights of
a Holder to receive Warrant Shares on a “cashless exercise,” and to receive the
cash payments contemplated pursuant to Sections 1(a), 1(c) and 4(b), in no event
will the Company be required to pay to the Holder and cash or other
consideration or otherwise net cash settle a Warrant exercise.

 

(e)       Disputes. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the Holder the number of Warrant Shares that are not
disputed and resolve such dispute in accordance with Section 11.

 

(f)       Beneficial Ownership. Notwithstanding anything to the contrary
contained herein, the Company shall not effect the exercise of any portion of
this Warrant, and the Holder shall not have the right to exercise any portion of
this Warrant, pursuant to the terms and conditions of this Warrant and any such
exercise shall be null and void and treated as if never made, to the extent that
after giving effect to such exercise, the Holder together with the other
Attribution Parties collectively would beneficially own in excess of
[4.99%][9.99%] (the “Maximum Percentage”) of the number of shares of Common
Stock outstanding immediately after giving effect to such exercise. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by the Holder and the other Attribution Parties shall include
the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which the determination of such
sentence is being made, but shall exclude the number of shares of Common Stock
that would be issuable upon (A) exercise of the remaining, unexercised portion
of this Warrant beneficially owned by the Holder or any of the other Attribution
Parties and (B) exercise or conversion of the unexercised or unconverted portion
of any other securities of the Company (including, without limitation, any
convertible notes or convertible preferred stock or warrants, including the
other Warrants) beneficially owned by the Holder or any other Attribution Party
subject to a limitation on conversion or exercise analogous to the limitation
contained in this Section 1(f). For purposes of this Section 1(f), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “1934 Act”). For purposes of this Warrant,
in determining the number of outstanding shares of Common Stock the Holder may
acquire upon the exercise of this Warrant without exceeding the Maximum
Percentage, the Holder may rely on the number of outstanding shares of Common
Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K,
Quarterly Report on Form 10-Q and Current Reports on Form 8-K or other public
filing with the Securities and Exchange Commission (the “SEC”), as the case may
be, (y) a more recent public announcement by the Company or (z) any other
written notice by the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding (the “Reported Outstanding Share Number”). If
the Company receives an Exercise Notice from the Holder at a time when the
actual number of outstanding shares of Common Stock is less than the Reported
Outstanding Share Number, the Company shall (i) notify the Holder in writing of
the number of shares of Common Stock then outstanding and, to the extent that
such Exercise Notice would otherwise cause the Holder’s beneficial ownership, as
determined pursuant to this Section 1(f), to exceed the Maximum Percentage, the
Holder must notify the Company of a reduced number of Warrant Shares to be
purchased pursuant to such Exercise Notice (the number of shares by which such
purchase is reduced, the “Reduction Shares”) and (ii) as soon as reasonably
practicable, the Company shall return to the Holder any exercise price paid by
the Holder for the Reduction Shares. For any reason at any time, upon the
written or oral request of the Holder, the Company shall within one (1) Business
Day confirm orally and in writing or by electronic mail to the Holder the number
of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Warrant,
by the Holder and any other Attribution Party since the date as of which the
Reported Outstanding Share Number was reported. In the event that the issuance
of Common Stock to the Holder upon exercise of this Warrant results in the
Holder and the other Attribution Parties being deemed to beneficially own, in
the aggregate, more than the Maximum Percentage of the number of outstanding
shares of Common Stock (as determined under Section 13(d) of the 1934 Act), the
number of shares so issued by which the Holder’s and the other Attribution
Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the
“Excess Shares”) shall be deemed null and void and shall be cancelled ab initio,
and the Holder shall not have the power to vote or to transfer the Excess
Shares. As soon as reasonably practicable after the issuance of the Excess
Shares has been deemed null and void, the Company shall return to the Holder the
exercise price paid by the Holder for the Excess Shares. Upon delivery of a
written notice to the Company, the Holder may from time to time increase or
decrease the Maximum Percentage to any other percentage not in excess of 9.99%
as specified in such notice; provided that (i) any such increase in the Maximum
Percentage will not be effective until the sixty-first (61st) day after such
notice is delivered to the Company and (ii) any such increase or decrease will
apply only to the Holder and the other Attribution Parties and not to any other
holder of Warrants that is not an Attribution Party of the Holder. For purposes
of clarity, the shares of Common Stock issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to be
beneficially owned by the Holder for any purpose including for purposes of
Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to
exercise this Warrant pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of exercisability. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 1(f) to the extent necessary to correct this paragraph
or any portion of this paragraph that may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section 1(f) or to
make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not be waived
and shall apply to a successor holder of this Warrant.

 

 - 32 - 

 

 

(g)       Required Reserve Amount.  So long as this Warrant remains outstanding,
the Company shall at all times keep reserved for issuance under this Warrant a
number of shares of Common Stock at least equal to 100% of the maximum number of
shares of Common Stock as shall be necessary to satisfy the Company’s obligation
to issue shares of Common Stock under the Warrants then outstanding (without
regard to any limitations on exercise) (the “Required Reserve Amount”); provided
that at no time shall the number of shares of Common Stock reserved pursuant to
this Section 1(g) be reduced other than in connection with any exercise of
Warrants or such other event covered by Section 2(c) below.  The Required
Reserve Amount (including, without limitation, each increase in the number of
shares so reserved) shall be allocated pro rata among the holders of the
Warrants based on the number of shares of Common Stock issuable upon exercise of
Warrants held by each holder thereof on the Issuance Date (without regard to any
limitations on exercise) (the “Authorized Share Allocation”). In the event that
a holder shall sell or otherwise transfer any of such holder’s Warrants, each
transferee shall be allocated a pro rata portion of such holder’s Authorized
Share Allocation. Any shares of Common Stock reserved and allocated to any
Person that ceases to hold any Warrants shall be allocated to the remaining
holders of Warrants, pro rata based on the number of shares of Common Stock
issuable upon exercise of the Warrants then held by such holders thereof
(without regard to any limitations on exercise).

 

(h)       Insufficient Authorized Shares. If at any time while this Warrant
remains outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance the Required Reserve Amount (an “Authorized Share Failure”), then the
Company shall promptly take all action reasonably necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for this Warrant then
outstanding. Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than ninety (90) days after the occurrence of such
Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common
Stock. In connection with such meeting, the Company shall provide each
stockholder with a proxy statement and shall use its reasonable best efforts to
solicit its stockholders’ approval of such increase in authorized shares of
Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal. Notwithstanding the foregoing, if
any such time of an Authorized Share Failure, the Company is able to obtain the
written consent of a majority of the shares of its issued and outstanding shares
of Common Stock to approve the increase in the number of authorized shares of
Common Stock, the Company may satisfy this obligation by obtaining such consent
and submitting for filing with the SEC an Information Statement on Schedule 14C.

 

 - 33 - 

 

  

2.      ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise
Price and the number of Warrant Shares shall be adjusted from time to time as
follows:

 

(a)   Adjustment Upon Issuance of Common Stock. If and whenever on or after the
Subscription Date, the Company issues or sells, or in accordance with this
Section 2 is deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or held by or
for the account of the Company, but excluding shares of Common Stock deemed to
have been issued or sold by the Company in connection with any Excluded
Securities) for a consideration per share (the “New Issuance Price”) less than a
price (the “Applicable Price”) equal to the Exercise Price in effect immediately
prior to such issuance or sale or deemed issuance or sale (the foregoing a
“Dilutive Issuance”), then immediately after such Dilutive Issuance, the
Exercise Price then in effect shall be reduced to an amount equal to the New
Issuance Price. For purposes of determining the adjusted Exercise Price under
this Section 2(a), the following shall be applicable:

 

(i)       Issuance of Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Options or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of any such
Options is less than the Applicable Price, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at
the time of the granting or sale of such Options for such price per share. For
purposes of this Section 2(a)(i), the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Options” shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any
one share of Common Stock upon the granting or sale of the Options, upon
exercise of the Options and upon conversion, exercise or exchange of any
Convertible Security issuable upon exercise of such Options less any
consideration paid or payable by the Company with respect to such one share of
Common Stock upon the granting or sale of such Options, upon exercise of such
Options and upon conversion exercise or exchange of any Convertible Security
issuable upon exercise of such Options. No further adjustment of the Exercise
Price shall be made upon the actual issuance of such shares of Common Stock or
of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such shares of Common Stock upon conversion, exercise or
exchange of such Convertible Securities.

 

(ii)       Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the lowest price per share for
which one share of Common Stock is issuable upon the conversion, exercise or
exchange thereof is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such Convertible Securities for
such price per share. For the purposes of this Section 2(a)(ii), the “lowest
price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof” shall be equal to the sum of the
lowest amounts of consideration (if any) received or receivable by the Company
with respect to any one share of Common Stock upon the issuance or sale of the
Convertible Security and upon conversion, exercise or exchange of such
Convertible Security less any consideration paid or payable by the Company with
respect to such one share of Common Stock upon the issuance or sale of such
Convertible Security and upon conversion, exercise or exchange of such
Convertible Security. No further adjustment of the Exercise Price shall be made
upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities, and if any such issuance or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustment of the Exercise Price has been or is to be made pursuant to
other provisions of this Section 2(a), no further adjustment of the Exercise
Price shall be made by reason of such issuance or sale.

 

 

  

(iii)       Change in Option Price or Rate of Conversion. If the purchase price
provided for in any Options, the additional consideration, if any, payable upon
the issue, conversion, exercise or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are convertible into or exercisable
or exchangeable for shares of Common Stock increases or decreases at any time
pursuant to the terms of such Options or Convertible Securities, the Exercise
Price in effect at the time of such increase or decrease shall be adjusted to
the Exercise Price, that would have been in effect at such time had such Options
or Convertible Securities provided for such increased or decreased purchase
price, additional consideration or increased or decreased conversion rate, as
the case may be, at the time initially granted, issued or sold. For purposes of
this Section 2(a)(iii), if the terms of any Option or Convertible Security that
was outstanding as of the Subscription Date are increased or decreased in the
manner described in the immediately preceding sentence, then such Option or
Convertible Security and the shares of Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have been issued as
of the date of such increase or decrease. No adjustment pursuant to this Section
2(a) shall be made if such adjustment would result in an increase of the
Exercise Price then in effect. For the avoidance of doubt, no adjustment in the
Exercise Price shall be made pursuant to this Section 2(a)(iii) as a result of
any modification of the terms of any Options or Convertible Securities after
their date of issuance.

 

(iv)       Calculation of Consideration Received. In case any Option is issued
in connection with the issuance or sale of other securities of the Company,
together comprising one integrated transaction, (x) the Options will be deemed
to have been issued for the Option Value of such Options and (y) the other
securities issued or sold in such integrated transaction shall be deemed to have
been issued or sold for the difference of (I) the aggregate consideration
received by the Company less any consideration paid or payable by the Company
pursuant to the terms of such other securities of the Company, less (II) the
Option Value of such Options; provided, that if the value determined pursuant to
clause (y) above would result in a value less than the par value of the Common
Stock, then the other securities issued or sold in such integrated transaction
shall be deemed to have been issued or sold for the par value of the Common
Stock. If any shares of Common Stock, Options or Convertible Securities are
issued or sold or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount received by the Company
therefor. If any shares of Common Stock, Options or Convertible Securities are
issued or sold for a consideration other than cash, the amount of such
consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of publicly traded
securities, in which case the amount of consideration received by the Company
will be the Closing Sale Price of such publicly traded securities on the date of
receipt of such publicly traded securities. If any shares of Common Stock,
Options or Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor will be deemed to be the fair value
of such portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible Securities,
as the case may be. The fair value of any consideration other than cash or
publicly traded securities will be determined jointly by the Company and the
Required Holders. If such parties are unable to reach agreement within ten (10)
days after the occurrence of an event requiring valuation (the “Valuation
Event”), the fair value of such consideration will be determined within five (5)
Business Days after the tenth (10th) day following the Valuation Event by an
independent, reputable appraiser jointly selected by the Company and the
Required Holders. The determination of such appraiser shall be final and binding
upon all parties absent manifest error and the fees and expenses of such
appraiser shall be borne by the Company.

 

- 36 -

 

 

(v)       Record Date. If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (A) to receive a dividend or other
distribution payable in shares of Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase shares of Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issuance 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.

 

(vi)       No Modification. So long as any of the Warrants are outstanding, the
Company shall not amend, modify or change the terms of any Options or
Convertible Securities (whether issued on, prior or after the Subscription Date)
to lower the exercise price or conversion price thereof.

  

(b)   Voluntary Adjustment by Company. The Company may at any time during the
term of this Warrant reduce the then current Exercise Price to any amount and
for any period of time deemed appropriate by the Board of Directors of the
Company.

 

(c)   Adjustment upon Subdivision or Combination of Common Stock. If the Company
at any time on or after the Subscription Date subdivides (by any stock split,
stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise
Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately increased. If
the Company at any time on or after the Subscription Date combines (by
combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately decreased.
Any adjustment under this Section 2(c) shall become effective at the close of
business on the date the subdivision or combination becomes effective.

 

- 37 -

 

 

3.      RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments
pursuant to Section 2 above, if, on or after the Subscription Date and on or
prior to the Expiration Date, the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property, options, evidence of indebtedness or any other assets by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the date on which
a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be
determined for the participation in such Distribution (provided, however, that
to the extent that the Holder's right to participate in any such Distribution
would result in the Holder and the other Attribution Parties exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to such extent (and shall not be entitled to beneficial ownership
of such shares of Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time or times as its right
thereto would not result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, at which time or times the Holder shall be
granted such Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held similarly in
abeyance) to the same extent as if there had been no such limitation).

 

4.      PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)   Purchase Rights. In addition to any adjustments pursuant to Section 2
above, if at any time on or after the Subscription Date and on or prior to the
Expiration Date the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights that the Holder could
have acquired if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of Common Stock
are to be determined for the grant, issuance or sale of such Purchase Rights
(provided, however, that to the extent that the Holder's right to participate in
any such Purchase Right would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not be entitled
to participate in such Purchase Right to such extent (and shall not be entitled
to beneficial ownership of such Common Stock as a result of such Purchase Right
(and beneficial ownership) to such extent) and such Purchase Right to such
extent shall be held in abeyance for the benefit of the Holder until such time
or times as its right thereto would not result in the Holder and the other
Attribution Parties exceeding the Maximum Percentage, at which time or times the
Holder shall be granted such right (and any Purchase Right granted, issued or
sold on such initial Purchase Right or on any subsequent Purchase Right to be
held similarly in abeyance) to the same extent as if there had been no such
limitation).

 

- 38 -

 

 

(b)   Fundamental Transaction. The Company shall not enter into or be party to a
Fundamental Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant in accordance with the
provisions of this Section 4(b), including agreements to deliver to the Holder
in exchange for this Warrant a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to this Warrant,
including, without limitation, that is exercisable for a corresponding number of
shares of capital stock equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and with an
exercise price that applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such adjustments to the number of shares of capital
stock and such exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such Fundamental
Transaction). Upon the consummation of each Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for the Company (so that
from and after the date of the applicable Fundamental Transaction, the
provisions of this Warrant and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations of the
Company under this Warrant with the same effect as if such Successor Entity had
been named as the Company herein. Upon consummation of each Fundamental
Transaction, the Successor Entity shall deliver to the Holder confirmation that
there shall be issued upon exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction, in lieu of the shares of
Common Stock (or other securities, cash, assets or other property (except such
items still issuable under Sections 3 and 4(a) above, which shall continue to be
receivable thereafter)) issuable upon the exercise of this Warrant prior to the
applicable Fundamental Transaction, such shares of common stock (or its
equivalent) of the Successor Entity (including its Parent Entity) that the
Holder would have been entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately prior to the
applicable Fundamental Transaction (without regard to any limitations on the
exercise of this Warrant), as adjusted in accordance with the provisions of this
Warrant. Notwithstanding the foregoing, and without limiting Section 1(f)
hereof, the Holder may elect, at its sole option, by delivery of written notice
to the Company to waive this Section 4(b) to permit the Fundamental Transaction
without the assumption of this Warrant. In addition to and not in substitution
for any other rights hereunder, prior to the consummation of each Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities or other assets with respect to or in exchange for shares of
Common Stock (a “Corporate Event”), the Company shall make appropriate provision
to insure that the Holder will thereafter have the right to receive upon an
exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction but prior to the Expiration Date, in lieu of the shares
of the Common Stock (or other securities, cash, assets or other property (except
such items still issuable under Sections 3 and 4(a) above, which shall continue
to be receivable thereafter)) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of stock, securities, cash, assets or
any other property whatsoever (including warrants or other purchase or
subscription rights) (collectively, the “Corporate Event Consideration”) that
the Holder would have been entitled to receive upon the happening of the
applicable Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to any
limitations on the exercise of this Warrant). The provision made pursuant to the
preceding sentence shall be in a form and substance reasonably satisfactory to
the Holder. The provisions of this Section 4(b) shall apply similarly and
equally to successive Fundamental Transactions and Corporate Events.
Notwithstanding the foregoing, in the event of a Change of Control, at the
request of the Holder delivered before the 30th day after such Change of
Control, the Company (or the Successor Entity) shall purchase this Warrant from
the Holder by paying to the Holder, within five (5) Business Days after such
request (or, if later, on the effective date of the Change of Control), an
amount equal to the Black Scholes Value of the remaining unexercised portion of
this Warrant on the effective date of such Change of Control, payable in cash;
provided, however, that, if the Change of Control is not within the Company’s
control, including not approved by the Company’s Board of Directors, the Holder
shall only be entitled to receive from the Company or any Successor Entity, as
of the date of consummation of such Change of Control, the same type or form of
consideration (and in the same proportion), at the Black Scholes Value of the
unexercised portion of this Warrant, that is being offered and paid to the
holders of Common Stock of the Company in connection with the Change of Control,
whether that consideration be in the form of cash, stock or any combination
thereof, or whether the holders of Common Stock are given the choice to receive
from among alternative forms of consideration in connection with the Change of
Control.

 

- 39 -

 

 

5.      NONCIRCUMVENTION. The Company hereby covenants and agrees that the
Company will not, by amendment of its Certificate of Incorporation or Bylaws, or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, dissolution, issuance 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, and will at all times in good faith carry out all of the
provisions of this Warrant and take all action as may be required to protect the
rights of the Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, (ii) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and
(iii) shall, so long as any of the Warrants are outstanding, take all action
necessary to reserve and keep available out of its authorized and unissued
shares of Common Stock, solely for the purpose of effecting the exercise of the
Warrants, the number of shares of Common Stock as shall from time to time be
necessary to effect the exercise of the Warrants then outstanding (without
regard to any limitations on exercise).

 

6.      WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise
specifically provided herein, 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 capital stock 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, 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 that 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 (upon exercise of this
Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.
Notwithstanding this Section 6, the Company shall provide the Holder with copies
of the same notices and other information given to the stockholders of the
Company generally, contemporaneously with the giving thereof to the
stockholders.

 

- 40 -

 

 

7.      REISSUANCE OF WARRANTS.

 

(a)   Transfer of Warrant. If this Warrant is to be transferred, the Holder
shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less than the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.

 

(b)   Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary form
(but without the obligation to post a bond) and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall execute and
deliver to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then underlying this
Warrant.

 

(c)   Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Warrant or Warrants (in accordance with Section 7(d)) representing in the
aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender.

 

(d)   Issuance of New Warrants. If this Warrant is not held in global form
through DTC (or any successor depository), whenever the Company is required to
issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i)
shall be of like tenor with this Warrant, (ii) shall represent, as indicated on
the face of such new Warrant, the right to purchase the Warrant Shares then
underlying this Warrant (or in the case of a new Warrant being issued pursuant
to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder
that, when added to the number of shares of Common Stock underlying the other
new Warrants issued in connection with such issuance, does not exceed the number
of Warrant Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant that is the same as the
Issuance Date, and (iv) shall have the same rights and conditions as this
Warrant.

 

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(e)   Warrant Register. If this Warrant is held in global form through DTC (or
any successor depository), the Warrant Agent shall register this Warrant, upon
records to be maintained by the Warrant Agent for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. If this
Warrant is not held in global form through DTC (or any successor depository),
the Company and the Warrant Agent 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.

 

8.      NOTICES. Whenever notice is required to be given under this Warrant,
including, without limitation, an Exercise Notice, unless otherwise provided
herein, such notice shall be given in writing, (i) if delivered (a) from within
the domestic United States, by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, electronic
mail or by facsimile or (b) from outside the United States, by International
Federal Express, electronic mail or facsimile, and (ii) will be deemed given (A)
if delivered by first-class registered or certified mail domestic, three (3)
Business Days after so mailed, (B) if delivered by nationally recognized
overnight carrier, one (1) Business Day after so mailed, (C) if delivered by
International Federal Express, two (2) Business Days after so mailed and (D) at
the time of transmission, if delivered by electronic mail to each of the email
addresses specified in this Section 8 prior to 5:00 p.m. (New York time) on a
Trading Day, (E) the next Trading Day after the date of transmission, if
delivered by electronic mail to each of the email addresses specified in this
Section 8 on a day that is not a Trading Day or later than 5:00 p.m. (New York
time) on any Trading Day and (F) if delivered by facsimile, upon electronic
confirmation of receipt of such facsimile, and will be delivered and addressed
as follows:

 

(i)       if to the Company, to:

Outlook Therapeutics, Inc.
7 Clarke Drive
Cranbury, NJ 08512
Attn: Lawrence A. Kenyon

 

 

(ii) if to the Holder, at such address or other contact information delivered by
the Holder to Company or as is on the books and records of the Company.

 

The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Warrant, including in reasonable detail a description of
such action and the reason therefor. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Exercise Price, setting forth in reasonable detail,
and certifying, the calculation of such adjustment and (ii) at least fifteen
(15) days prior to the date on which the Company closes its books or takes a
record (A) with respect to any dividend or distribution upon the shares of
Common Stock, (B) with respect to any grants, issuances or sales of any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property to holders of shares of Common Stock or (C) for determining
rights to vote with respect to any Fundamental Transaction, dissolution or
liquidation; provided in each case that such information shall be made known to
the public prior to or in conjunction with such notice being provided to the
Holder. It is expressly understood and agreed that the time of exercise
specified by the Holder in each Exercise Notice shall be definitive and may not
be disputed or challenged by the Company.

 

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9.      AMENDMENT AND WAIVER. Except as otherwise provided herein, the
provisions of this Warrant may be amended or waived 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.

 

10.  GOVERNING LAW; JURISDICTION; JURY TRIAL. This Warrant shall be governed by
and construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Warrant shall be
governed by, the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. The Company 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, 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, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. The Company 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 to the
Company at the address set forth in Section 8(i) above or such other address as
the Company subsequently delivers to the Holder 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. Nothing contained herein shall be deemed
or operate to preclude the Holder from bringing suit or taking other legal
action against the Company in any other jurisdiction to collect on the Company's
obligations to the Holder, to realize on any collateral or any other security
for such obligations, or to enforce a judgment or other court ruling in favor of
the Holder. If either party shall commence an action, suit or proceeding to
enforce any provisions of this Warrant, the prevailing party in such action,
suit or proceeding shall be reimbursed by the other party for their reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding. THE COMPANY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

11.  DISPUTE RESOLUTION. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall submit the disputed determinations or arithmetic calculations via
facsimile or electronic mail within two (2) Business Days of receipt of the
Exercise Notice or other event giving rise to such dispute, as the case may be,
to the Holder. If the Holder and the Company are unable to agree upon such
determination or calculation of the Exercise Price or the Warrant Shares within
three (3) Business Days of such disputed determination or arithmetic calculation
being submitted to the Holder, then the Company shall, within two (2) Business
Days submit via facsimile or electronic mail (a) the disputed determination of
the Exercise Price to an independent, reputable investment bank selected by the
Company and approved by the Holder or (b) the disputed arithmetic calculation of
the Warrant Shares to the Company's independent, outside accountant. The Company
shall cause at its expense the investment bank or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and
the Holder of the results no later than ten (10) Business Days from the time it
receives the disputed determinations or calculations. Such investment bank's or
accountant's determination or calculation, as the case may be, shall be binding
upon all parties absent demonstrable error.

 

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12.  REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies
provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant and any other Transaction Documents, at
law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder to
pursue actual damages for any failure by the Company to comply with the terms of
this Warrant. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.

 

13.  TRANSFER. This Warrant and the Warrant Shares may be offered for sale,
sold, transferred, pledged or assigned without the consent of the Company.

 

14.  SEVERABILITY; CONSTRUCTION; HEADINGS. If any provision of this Warrant is
prohibited by law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Warrant so long as this Warrant as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair
the respective expectations or reciprocal obligations of the parties or the
practical realization of the benefits that would otherwise be conferred upon the
parties. The parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s). This Warrant shall be deemed to be jointly drafted
by the Company and the Holder and shall not be construed against any Person as
the drafter hereof. The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Warrant.

 

15.  DISCLOSURE. Upon receipt or delivery by the Company of any notice in
accordance with the terms of this Warrant, unless the Company has in good faith
determined that the matters relating to such notice do not constitute material,
nonpublic information relating to the Company or its subsidiaries, the Company
shall contemporaneously with any such receipt or delivery publicly disclose such
material, nonpublic information on a Current Report on Form 8-K or otherwise. In
the event that the Company believes that a notice contains material, nonpublic
information relating to the Company or its subsidiaries, the Company so shall
indicate to such Holder contemporaneously with delivery of such notice, and in
the absence of any such indication, the Holder shall be allowed to presume that
all matters relating to such notice do not constitute material, nonpublic
information relating to the Company or its subsidiaries.

 

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16.  WARRANT AGENT AGREEMENT. If this Warrant is held in global form through DTC
(or any successor depositary), this Warrant is issued subject to the Warrant
Agent Agreement. To the extent any provision of this Warrant conflicts with the
express provisions of the Warrant Agent Agreement, the provisions of this
Warrant shall govern and be controlling.

 

17.  CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms
shall have the following meanings:

 

(a)   “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
“control” of a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

 

(b)   “Approved Stock Plan” means any employee benefit plan that has been
approved by a majority of the disinterested members of the Board of Directors of
the Company, pursuant to which the Company’s securities may be issued to any
employee, officer or director for services provided to the Company.

 

(c)   “Attribution Parties” means, collectively, the following Persons and
entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Subscription Date,
directly or indirectly managed or advised by the Holder's investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company's Common
Stock would or could be aggregated with the Holder's and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution
Parties to the Maximum Percentage.

 

(d)   “Bid Price” means, for any security as of the particular time of
determination, the bid price for such security on the Principal Market as
reported by Bloomberg as of such time of determination, or, if the Principal
Market is not the principal securities exchange or trading market for such
security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
as of such time of determination, or if the foregoing does not apply, the bid
price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg as of such time of
determination, or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any market
makers for such security as reported in the “pink sheets” by OTC Markets Group
Inc. (formerly Pink Sheets LLC) as of such time of determination. If the Bid
Price cannot be calculated for a security as of the particular time of
determination on any of the foregoing bases, the Bid Price of such security as
of such time of determination 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 such dispute
shall be resolved in accordance with the procedures in Section 11. All such
determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period.

 

- 45 -

 

 

(e)   “Black Scholes Value” means the value of this Warrant based on the
Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg
determined as of the day immediately following the first public announcement of
the applicable Change of Control, or, if the Change of Control is not publicly
announced, the date the Change of Control is consummated, for pricing purposes
and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of such date of
request, (ii) an expected volatility equal to 100%, (iii) the underlying price
per share used in such calculation shall be the greater of (a) the highest
Weighted Average Price during the five (5) Trading Days prior to the closing of
the Change of Control and (b) the sum of the price per share being offered in
cash, if any, plus the value of any non-cash consideration, if any, being
offered in such Change of Control, (iv) a zero cost of borrow and (v) a 360 day
annualization factor.

 

(f)    “Bloomberg” means Bloomberg Financial Markets.

 

(g)   “Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.

 

(h)   “Change of Control” means any Fundamental Transaction other than (i) any
reorganization, recapitalization or reclassification of the Common Stock in
which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, are, in all material respect, the
holders of the voting power of the surviving entity (or entities with the
authority or voting power to elect the members of the board of directors (or
their equivalent if other than a corporation) of such entity or entities) after
such reorganization, recapitalization or reclassification, (ii) pursuant to a
migratory merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company or (iii) a merger in connection with a bona fide
acquisition by the Company of any Person in which (x) the gross consideration
paid, directly or indirectly, by the Company in such acquisition is not greater
than 40% of the Company’s market capitalization as calculated on the date of the
consummation of such merger and (y) such merger does not contemplate a change to
the identity of a majority of the board of directors of the Company.
Notwithstanding anything herein to the contrary, any transaction or series of
transaction that, directly or indirectly, results in the Company or the
Successor Entity not having Common Stock or common stock, as applicable,
registered under the 1934 Act and listed on an Eligible Market shall be deemed a
Change of Control.

 

(i)     “Closing Bid Price” and “Closing Sale Price” means, for any security as
of any date, the last closing bid price and last closing trade price,
respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the OTC Link
or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, 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 such dispute shall be resolved pursuant to
Section 11. All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or other similar
transaction during the applicable calculation period.

 

- 46 -

 

 

(j)     “Common Stock” means (i) the Company's Common Stock, par value $0.01 per
share, and (ii) any capital stock into which such Common Stock shall have been
changed or any capital stock resulting from a reclassification of such Common
Stock.

 

(k)   “Convertible Securities” means any stock or securities (other than
Options) directly or indirectly convertible into or exercisable or exchangeable
for shares of Common Stock.

 

(l)     “Eligible Market” means The NASDAQ Capital Market, the NYSE American
LLC, The NASDAQ Global Select Market, The NASDAQ Global Market or The New York
Stock Exchange, Inc.

 

(m) “Excluded Securities” means any shares of Common Stock issued or issuable,
or deemed issued or issuable pursuant to Section 2(a): (i) in connection with
any Approved Stock Plan, including, for the avoidance of doubt, the issuance of
equity awards (including Options or Convertible Securities) pursuant to any such
Approved Stock Plan after the Subscription Date, (ii) upon exercise of the
Warrants, (iii) upon conversion, exercise, exchange or settlement of any Options
or Convertible Securities that are outstanding on the day immediately preceding
the Subscription Date, including, for the avoidance of doubt, the issuance of
equity awards (including Options or Convertible Securities) pursuant to any such
Approved Stock Plan after the Subscription Date, (iv) upon the issuance of
“payment-in-kind” dividends of additional shares of the Company’s Series A-1
Convertible Preferred Stock, as contemplated by the terms thereof, and (v)
pursuant to acquisitions, divestitures, licenses, partnerships, collaborations
or strategic transactions approved by the Board of Directors or a majority of
the members of a committee of directors established for such purposes; provided
that any such issuance shall only be to a Person (or to the equity holders of a
Person) that is, itself or through its subsidiaries, an operating company or an
asset in a business synergistic with the business of the Company and shall
provide to the Company additional benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities.

 

- 47 -

 

 

(n)   “Expiration Date” means the date fifteen (15) months after the Initial
Exercisability Date or, if such date falls on a day other than a Business Day or
on which trading does not take place on the Principal Market (a “Holiday”), the
next day that is not a Holiday.

 

(o)   “Fundamental Transaction” means (A) that the Company shall, directly or
indirectly, including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or substantially all of the
properties or assets of the Company or any of its “significant subsidiaries” (as
defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow the Company
to be subject to or have its shares of Common Stock be subject to or party to
one or more Subject Entities making, a purchase, tender or exchange offer that
is accepted by the holders of at least either (x) 50% of the outstanding shares
of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as
if any shares of Common Stock held by all Subject Entities making or party to,
or Affiliated with any Subject Entities making or party to, such purchase,
tender or exchange offer were not outstanding; or (z) such number of shares of
Common Stock such that all Subject Entities making or party to, or Affiliated
with any Subject Entity making or party to, such purchase, tender or exchange
offer, become collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv)
consummate a stock purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more Subject Entities whereby all such Subject
Entities, individually or in the aggregate, acquire, either (x) at least 50% of
the outstanding shares of Common Stock, (y) at least 50% of the outstanding
shares of Common Stock calculated as if any shares of Common Stock held by all
the Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such stock purchase agreement or other business combination
were not outstanding; or (z) such number of shares of Common Stock such that the
Subject Entities become collectively the beneficial owners (as defined in Rule
13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common
Stock, or (v) reorganize, recapitalize or reclassify its shares of Common Stock,
(B) that the Company shall, directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related transactions,
allow any Subject Entity individually or the Subject Entities in the aggregate
to be or become the “beneficial owner” (as defined in Rule 13d-3 under the 1934
Act), directly or indirectly, whether through acquisition, purchase, assignment,
conveyance, tender, tender offer, exchange, reduction in outstanding shares of
Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization,
recapitalization or reclassification or otherwise in any manner whatsoever, of
either (x) at least 50% of the aggregate ordinary voting power represented by
issued and outstanding shares of Common Stock, (y) at least 50% of the aggregate
ordinary voting power represented by issued and outstanding shares of Common
Stock not held by all such Subject Entities as of the Subscription Date
calculated as if any shares of Common Stock held by all such Subject Entities
were not outstanding, or (z) a percentage of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock or other equity
securities of the Company sufficient to allow such Subject Entities to effect a
statutory short form merger or other transaction requiring other stockholders of
the Company to surrender their Common Stock without approval of the stockholders
of the Company or (C) directly or indirectly, including through subsidiaries,
Affiliates or otherwise, in one or more related transactions, the issuance of or
the entering into any other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in which case
this definition shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this definition to the extent necessary to
correct this definition or any portion of this definition that may be defective
or inconsistent with the intended treatment of such instrument or transaction.

 

- 48 -

 

 

(p)   “Group” means a “group” as that term is used in Section 13(d) of the 1934
Act and as defined in Rule 13d-5 thereunder.

 

(q)   “Option Value” means the value of an Option based on the Black-Scholes
Option Pricing model obtained from the “OV” function on Bloomberg determined as
of the day of the most recent Closing Sale Price of the Common Stock prior to
the public announcement of the pricing of the applicable Option (or, if the
pricing is not publicly announced, on the most recent Closing Sale Price of the
Common Stock prior to the pricing of the applicable Option) and reflecting (i) a
risk-free interest rate corresponding to the U.S. Treasury rate for a period
equal to the remaining term of the applicable Option as of the applicable date
of determination, (ii) an expected volatility equal to 50%, (iii) an underlying
price per share equal to the most recent Closing Sale Price of the Common Stock
prior to the public announcement of the pricing of the applicable Option (or, if
the pricing is not publicly announced, on the most recent Closing Sale Price of
the Common Stock prior to the pricing of the applicable Option), (iv) a zero
cost of borrow and (v) a 360-day annualization factor.

 

(r)    “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

 

(s)    “Parent Entity” of a Person means an entity that, directly or indirectly,
controls the applicable Person, including such entity whose common stock or
equivalent equity security is quoted or listed on an Eligible Market (or, if so
elected by the Holder, any other market, exchange or quotation system), or, if
there is more than one such Person or such entity, the Person or such entity
designated by the Holder or in the absence of such designation, such Person or
entity with the largest public market capitalization as of the date of
consummation of the Fundamental Transaction or Change of Control.

 

(t)     “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.

 

(u)   “Principal Market” means the principal securities exchange or securities
market on which the Common Stock is then traded.

 

(v)   “Required Holders” means the holders of the Warrants representing at least
a majority of the shares of Common Stock underlying the Warrants then
outstanding.

 

(w) “Standard Settlement Period” means the standard settlement period, expressed
in a number of Trading Days, for the Company’s primary trading market or
quotation system with respect to the Common Stock that is in effect on the date
of receipt of an applicable Exercise Notice.

 

- 49 -

 

 

(x)   “Subject Entity” means any Person, Persons or Group or any Affiliate or
associate of any such Person, Persons or Group.

 

(y)   “Successor Entity” means one or more Person or Persons (or, if so elected
by the Holder, the Company or Parent Entity) formed by, resulting from or
surviving any Fundamental Transaction or Change of Control or one or more Person
or Persons (or, if so elected by the Holder, the Company or the Parent Entity)
with which such Fundamental Transaction or Change of Control shall have been
entered into.

 

(z)   “Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded.

 

(aa)            “Transaction Documents” means any agreement entered into by and
between the Company and the Holder, as applicable.

 

(bb)           “Warrant Agent Agreement” means that certain Warrant Agent
Agreement, dated as of the Initial Exercise Date, between the Company and the
Warrant Agent. 

 

(cc)            “Warrant Agent” means American Stock Transfer & Trust Company,
LLC, a New York limited liability trust company.

 

(dd)           “Weighted Average Price” means, for any security as of any date,
the dollar volume-weighted average price for such security on the Principal
Market during the period beginning at 9:30:01 a.m., New York time (or such other
time as the Principal Market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York time (or such other time as the
Principal Market publicly announces is the official close of trading), as
reported by Bloomberg through its “Volume at Price” function or, if the
foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York time (or
such other time as such market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York time (or such other time as such
market publicly announces is the official close of trading), as reported by
Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest Closing Bid
Price and the lowest closing ask price of any of the market makers for such
security as reported in the OTC Link or “pink sheets” by OTC Markets Group Inc.
(formerly Pink OTC Markets Inc.). If the Weighted Average Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Weighted Average 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 such dispute shall be resolved pursuant to Section 11 with the
term “Weighted Average Price” being substituted for the term “Exercise Price.”
All such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination, reclassification or other similar transaction
during the applicable calculation period.

  

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this 15-Month Warrant to Purchase
Common Stock to be duly executed as of the Issuance Date set out above.

 

  OUTLOOK THERAPEUTICS, INC.        

 

  By:       Name:       Title:    

 

 

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

15-MONTH WARRANT TO PURCHASE COMMON STOCK

 

OUTLOOK THERAPEUTICS, INC.

 

The undersigned holder hereby exercises the right to purchase _________________
shares of Common Stock (“Warrant Shares”) of Outlook Therapeutics, Inc., a
company organized under the laws of Delaware (the “Company”), evidenced by the
attached 15-Month Warrant to Purchase Common Stock (the “Warrant”). Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.

 

1. Form of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as:

 

____________ a “Cash Exercise” with respect to _________________ Warrant Shares;
and/or

 

____________ a “Cashless Exercise” with respect to _______________ Warrant
Shares.

 

2. Payment of Exercise Price. In the event that the holder has elected a Cash
Exercise with respect to some or all of the Warrant Shares to be issued pursuant
hereto, the holder shall pay the Aggregate Exercise Price in the sum of
$___________________ to the Company in accordance with the terms of the Warrant.

 

3. Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.

 

 

 

Date: _________________________ _____, ________

 

 

 

 

       Name of Registered Holder           By:       Name:     Title:  

 

 

 

 

ACKNOWLEDGMENT

 

 

The Company hereby acknowledges this Exercise Notice and hereby directs American
Stock Transfer & Trust Company, LLC to issue the above indicated number of
shares of Common Stock on or prior to the applicable Share Delivery Date.

 

  OUTLOOK THERAPEUTICS, INC.               By:       Name:   Title:

 

 

 

 

Exhibit E

 

Form of Warrant Certificate Request Notice

 

WARRANT CERTIFICATE REQUEST NOTICE

 

To: American Stock Transfer & Trust Company, LLC, as Warrant Agent for Outlook
Therapeutics, Inc. (the “Company”)

 

The undersigned Holder of Five-Year Common Stock Purchase Warrants (“Warrants”)
in the form of Global Warrants issued by the Company hereby elects to receive a
Definitive Certificate evidencing the Warrants held by the Holder as specified
below:

 

  1. Name of Holder of Warrants in form of Global Warrants:
_____________________________   2. Name of Holder in Definitive Certificate (if
different from name of Holder of Warrants in form of Global Warrants):
________________________________   3. Number of Warrants in name of Holder in
form of Global Warrants: ___________________   4. Number of Warrants for which
Definitive Certificate shall be issued: __________________   5. Number of
Warrants in name of Holder in form of Global Warrants after issuance of
Definitive Certificate, if any: ___________   6. Definitive Certificate shall be
delivered to the following address:

 

                                         

 

The undersigned hereby acknowledges and agrees that, in connection with this
Warrant Exchange and the issuance of the Definitive Certificate, the Holder is
deemed to have surrendered the number of Warrants in form of Global Warrants in
the name of the Holder equal to the number of Warrants evidenced by the
Definitive Certificate.

 

  [SIGNATURE OF HOLDER]           Name of Investing Entity:           Signature
of Authorized Signatory of Investing Entity:           Name of Authorized
Signatory:           Title of Authorized Signatory:           Date:  

 

 

 

 

Exhibit F

 

Form of Warrant Certificate Request Notice

 

WARRANT CERTIFICATE REQUEST NOTICE

 

To: American Stock Transfer & Trust Company, LLC, as Warrant Agent for Outlook
Therapeutics, Inc. (the “Company”)

 

The undersigned Holder of 15-Month Common Stock Purchase Warrants (“Warrants”)
in the form of Global Warrants issued by the Company hereby elects to receive a
Definitive Certificate evidencing the Warrants held by the Holder as specified
below:

 

  1. Name of Holder of Warrants in form of Global Warrants:
_____________________________   2. Name of Holder in Definitive Certificate (if
different from name of Holder of Warrants in form of Global Warrants):
________________________________   3. Number of Warrants in name of Holder in
form of Global Warrants: ___________________   4. Number of Warrants for which
Definitive Certificate shall be issued: __________________   5. Number of
Warrants in name of Holder in form of Global Warrants after issuance of
Definitive Certificate, if any: ___________   6. Definitive Certificate shall be
delivered to the following address:

 

                                         

 

The undersigned hereby acknowledges and agrees that, in connection with this
Warrant Exchange and the issuance of the Definitive Certificate, the Holder is
deemed to have surrendered the number of Warrants in form of Global Warrants in
the name of the Holder equal to the number of Warrants evidenced by the
Definitive Certificate.

 

  [SIGNATURE OF HOLDER]           Name of Investing Entity:           Signature
of Authorized Signatory of Investing Entity:           Name of Authorized
Signatory:           Title of Authorized Signatory:           Date: