Document:

Exhibit 10.1

 

SEPARATION AGREEMENT AND GENERAL RELEASE

 

This Separation Agreement and General Release (“Agreement”) is entered into by and between Gerald Plescia (hereinafter “Plescia” or “Employee”), Hertz Global Holdings, Inc. and The Hertz Corporation (hereinafter, together with their subsidiaries and divisions, “Hertz”, “the Company” or “the Companies”), duly acting under authority of its officers and directors.

 

WHEREAS, Plescia and the Companies acknowledge the existence of a Change In Control Agreement (“C.I.C. Agreement”) entered into by Plescia and The Hertz Corporation in or around July 25, 2005 and acknowledge and agree that no payment or other consideration is due to Plescia under the terms of the C.I.C. Agreement and that Plescia is not legally or contractually bound by the Executive Covenants (Section 8) of the C.I.C. Agreement; and

 

WHEREAS, Hertz terminated Plescia’s employment on January 25, 2011 (the “Termination Date”); and

 

WHEREAS, the parties have mutually agreed upon the following payments, benefits and other terms and conditions relating to the termination of Plescia’s employment.

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements stated herein, which Plescia and the Companies agree constitutes further good and valuable consideration, receipt of which is acknowledged herein, the parties stipulate and do mutually agree as follows:

 

1.             Termination of Employment.  Plescia’s employment with Hertz terminated by reason of Plescia’s retirement, effective on the Termination Date.

 

2.             Accrued Obligations and Vested Benefits.  Plescia is entitled to receive the following accrued obligations, which shall be paid as soon as practicable following the Termination Date:  (i) all salary earned or accrued but not yet paid through the Termination Date; (ii) reimbursement for any and all business expenses incurred prior to the Termination Date, subject to the terms of the Company’s reimbursement policy, (iii) payment for any earned and accrued, but unused vacation days, (iv) payment of Plescia’s 2010 Hertz Annual Bonus; and (v) any other benefits required by law.  In addition, Plescia is vested in Hertz’s Post-Retirement Medical Benefits (“Retiree Medical”), The Hertz Corporation Benefit Equalization Plan (“BEP”), The Hertz Corporation Supplemental Retirement Plan (“SERP II”), The Hertz Corporation Cash Balance Plan (“CBP”) and The Hertz Corporation 401K Plan (“410K Plan”) in accordance with the terms of those plans now in effect.

 

3.             Severance Benefits.  Provided that Plescia does not revoke this Agreement and complies with the terms of this Agreement, Hertz shall provide Plescia with the following benefits:

 

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a.     Severance Payments.  The equivalent of 2.0 times the sum of Plescia’ base salary plus Bonus as defined in Plescia’ C.I.C. Agreement for total gross amount of one million six hundred ninety two thousand seven hundred forty seven dollars and zero cents ($1,692,747.00)  less all applicable payroll taxes and withholdings paid to Plescia in gross amounts after the Effective Date of this Agreement as defined below.  Notwithstanding the foregoing, (1) no severance payments shall be made to Plescia during the period beginning on the Termination Date and ending on the six-month anniversary of such date or, if earlier, the date of Plescia’s death, (2) on the first Company pay period after this six month anniversary, a gross lump sum equivalent to 6 months of severance payments ($423,186.75) less all applicable payroll taxes and withholdings shall be paid to Plescia, (3) on or before December 1, 2011 a gross lump sum equivalent to 6 months of severance payments ($423,186.75) less all applicable payroll taxes and withholdings shall be paid to Plescia, and (4) on or before February 23, 2012 a gross lump sum equivalent to 12 months of severance payments ($846,373.50) less all applicable payroll taxes and withholdings shall be paid to Plescia.

 

b.     Equity Awards.  Provided that Plescia executes this Agreement and does not revoke the same in the manner contemplated by Section 15, (i) those options (“Options”) to purchase shares of common stock of Hertz Global Holdings, Inc. issued to Plescia pursuant to the Hertz Global Holdings, Inc. Stock Incentive Plan (the “Stock Incentive Plan”) and the Hertz Global Holdings, Inc. 2008 Omnibus Incentive Plan (the “Omnibus Plan”) that would have vested on or before March 31, 2011 if Plescia had remained employed by Hertz through March 31, 2011 shall vest immediately as of the Termination Date, and (ii) the restriction periods applicable to the performance stock units (“Performance Stock Units”) awarded to Plescia under the Omnibus Plan that would have lapsed on or before March 31, 2011 if Plescia had remained employed by Hertz through March 31, 2011 shall lapse upon the later of (A) Plescia’s Termination Date or (B) the date the Compensation Committee certifies any applicable performance criteria with respect to the Performance Stock Units.  All of Plescia’s vested Options, including those Options set forth herein, shall be exercisable through July 24, 2011 in accordance with the terms of the Stock Incentive Plan or the Omnibus Plan, as applicable, and any applicable award agreement, after which any Options not exercised, shall be canceled.  All of Plescia’s unvested Options shall terminate as of Plescia’s Termination Date.  All Performance Stock Units as to which the applicable restriction period lapses as provided in this Agreement shall be settled in accordance with the terms of the Omnibus Plan and any applicable award agreement, and all other Performance Stock Units shall be canceled on the Termination Date.  A chart identifying Plescia’s vested Options and Performance Stock Units listed above and exercise dates for the same is attached hereto as Exhibit A.

 

c.     Bonus.  Plescia will be considered eligible for 1/12th of his 2011 Bonus, which shall be payable in accordance with the Bonus Plan Provisions, but no later than March 15, 2012.

 

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d.     Outplacement Services.  In lieu of outplacement services, the Company will pay Plescia a lump sum of $25,000 on or before March 31, 2011 to use for outplacement assistance or in any other matter that Plescia sees fit.

 

e.     Car Privileges.  Plescia will be provided continued car privileges until January 24, 2016 in accordance with the same terms and conditions that were in effect on January 24, 2011.

 

f.      Health Plan Coverage.  Plescia will elect medical and health benefits under Hertz’s Retiree Medical.  In lieu of continued medical and health coverage through the Hertz Custom Benefits Program (“Benefits Program”), and for the period of time Plescia maintains Retiree Medical up to twenty-four (24) months from the Termination Date, the Company will reimburse Plescia on a quarterly basis in an amount equal to the difference between the cost of Plescia’s family medical and health coverage under Hertz’s Retiree Medical and Plescia’s out-of-pocket costs for medical and health benefits under the Benefits Program (not including any amounts Plescia contributed to any type of flexible spending account) as of the time of Plescia’s Termination Date.  For example, if the yearly cost of Plescia’s family medical and health coverage under Hertz’s Retiree Medical plan is $9,000 in 2011 and Plescia’s yearly out-of-pocket costs for medical and health benefits under the Benefits Program was $5,000, the Company would reimburse Plescia for $4,000 of his 2011 medical costs, which would be paid to him on a quarterly basis in 2011.

 

Plescia acknowledges and agrees that the consideration set forth in this Section 3 constitutes satisfaction and accord for any obligations due and owing to him pursuant to any employment agreement or other arrangement with the Companies.  Plescia acknowledges and agrees that unless he enters into this Agreement, he would not otherwise be entitled to receive the consideration set forth in this Section 3.

 

4.             Waiver and Release.

 

a.             In exchange for receiving the monies and benefits described in Section 3 above, Plescia does for himself and his heirs, executors, administrators, successors, and assigns, hereby release, acquit, and forever discharge and hold harmless the Companies and each of their divisions, subsidiaries, affiliated companies, successors, assigns, officers, directors, shareholders, employees, benefit and retirement plans (as well as trustees and administrators thereof), agents and heirs, assigns and successors, past and present, and any persons, firms or corporations in privity with any one of them, of and from any and all actions, causes of action, claims, demands, attorneys’ fees, compensation, expenses, promises, covenants, and damages of whatever kind or nature, in law or in equity, which Plescia has, had or could have asserted, known or unknown, at common law or under any statute, rule, regulation, order or law, whether federal, state or local, or on any grounds whatsoever, including without limitation, any and all claims for any additional severance pay, vacation pay, bonus or other compensation; any and all claims of discrimination or harassment based on race, color, national origin, ancestry, religion, marital status, sex, sexual orientation, disability, handicap, age or other unlawful discrimination; any and all claims arising

 

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under Title VII of the Federal Civil Rights Act; the Federal Civil Rights Act of 1991; the Americans with Disabilities Act; the Age Discrimination in Employment Act; the New Jersey Law Against Discrimination; or under any other state, federal, local or common law, with respect to any event, matter, claim, damage or injury arising out of his employment relationship with the Companies, and/or the separation of such employment relationship, and/or with respect to any other claim, matter, or event, from the beginning of the world to the date of execution of this Agreement.

 

b.             Plescia also waives and relinquishes any and all claims or rights to any monies, benefits, payments or other compensation due him or that could be deemed due him under any employment agreement, including the C.I.C. Agreement, and any other compensation arrangement of the Company, except all vested retirement plan benefits (including but not limited to BEP, CBP, 401K Plan, SERP II and Hertz’s Retiree Medical), COBRA continuation coverage rights, enforcement of this Agreement, and any claims under applicable workers’ compensation laws or for unemployment benefits.

 

c.             Nothing in this Agreement shall be construed to prohibit Plescia from filing any future charge or complaint with the EEOC or participating in any investigation or proceeding conducted by the EEOC, nor shall any provision of this Agreement adversely affect Plescia’s right to engage in such conduct.  Notwithstanding the foregoing, Plescia waives the right to obtain any relief from the EEOC or recover any monies or compensation as a result of filing a charge or complaint.  In addition to agreeing herein not to bring suit against the Companies, Plescia agrees not to seek damages from the Companies by filing a claim or charge with any state or governmental agency.

 

d.             In consideration for this Agreement and other good and sufficient consideration, the Companies agree to and hereby do release and discharge Plescia from and against any and all claims, causes of action, arbitrations, damages, costs and expenses and demands of any kind, whether known or unknown, which the Companies have or ever have had, from the beginning of time through the date of this Agreement.

 

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5.             Company Property.

 

a.             Plescia shall return to the Company all company property and “Company Information” in Plescia’s possession or control, including but not limited to, business reports and records, client reports and records, customer information, personally identifiable information relating to others, business strategies, contracts and proposals, files, a listing of customers or clients, lists of potential customers or clients, technical data, testing or research data, research and development projects, business plans, financial plans, internal memoranda concerning any of the above, and all credit cards, cardkey passes, door and file keys, computer access codes, software, and other physical or personal property which Plescia received, had access to or had in his possession, prepared or helped prepare in connection with Plescia’s employment with the Companies and Plescia shall not make or retain any copies, duplicates, reproductions, or excerpts thereof.  The term “Company Information” as used in this Agreement means (a) confidential information including, without limitation, information received from third parties under confidential conditions; and (b) other technical, business, or financial information, the use or disclosure of which might reasonably be construed to be contrary to the interest of the Company.

 

b.             Plescia acknowledges that in the course of employment with the Companies, Plescia has acquired Company Information as defined above and that such Company Information has been disclosed to Plescia in confidence and for the Company’s use only.  Plescia shall: (a) keep such Company Information strictly confidential; and (b) not disclose, communicate or use Company Information on Plescia’s own behalf, or on behalf of any third party. In view of the nature of Plescia’s employment and the nature of the Company Information which Plescia has received during the course of employment, Plescia agrees that any unauthorized disclosure to third parties of Company Information that would be legally deemed a trade secret would cause irreparable damage to the trade secret status of such Company Information and to the Company, and that, therefore, the Company shall be entitled to an injunction prohibiting Plescia from any such disclosure, attempted disclosure, violation, or threatened violation.  The undertakings set forth in this Section 5 shall survive the termination of this Agreement.

 

6.             Restrictive Covenants.

 

a.             Covenant Not To Compete.  Plescia agrees and acknowledges that because of the nature of his position and the sensitive and confidential nature of the information he was privy to while at Hertz, that for a period of twelve (12) months beginning on the date that Plescia signs this Agreement, Plescia agrees that he will not, as a principal, employer, stockholder, partner, agent, consultant, independent contractor, employee, or directly or indirectly in any other individual or representative capacity, in the United States or any other country:

 

(1)   (i)Directly or indirectly, without the Company’s prior written approval, engage in, continue in, or carry on a business competing with the business of the Company or any business substantially similar thereto, including owning or controlling any financial interest in any corporation, partnership, firm, or other form of business organization which competes with or is engaged in or carries on any aspect of such business or any business substantially similar

 

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thereto.  For purposes of this Agreement the terms “competing business” and “competitor” shall be defined as any business primarily engaged in the rental or leasing of heavy equipment.  Companies within that criteria include, but are not limited to, United Rentals, RSC Equipment, Sunbelt Rentals, NES Rentals, Ahern Rentals, h&E Equipment Services, Neff Rentals, Sunstate Equipment, Co., Volvo Rents, Cat Rental Stores (Caterpillar), Courier Car Rentals, Edge Care Rentals, Midway Fleet Leasing, Red Dog Rental Services, Angel Aerial, Studio Services, Star Rentals, Home Depot Rentals, Enterprise, the Avis Budget group, Dollar, Thrifty, National, Alamo (Vanguard), Payless, Sixt and EuropeCar.

 

(ii) This Section 6(a)(1) shall not be deemed to restrict Plescia from consulting or working for any competing business that also conducts business not conducted by the Company while Plescia was employed by the Company (“unrelated business”) so long as Plescia’s role whether direct or indirect (e.g., supervisor) is solely with respect to such unrelated business; or

 

(2)   Except for an unrelated business as set forth Section (a)(1)(ii), consult with, advise, or assist in any way, whether or not for consideration, any corporation, partnership, firm, or other business organization which is now, becomes, or may become a competitor of the Company in any aspect of the Company’s business during Plescia’s employment with the Company, including, but not limited to, advertising or otherwise endorsing the products of any such competitor

 

b.             Nonsolicitation.  Plescia further agrees that for a period of twenty four (24) months after the termination of his employment, he will not himself or in aid of or through others, attempt to solicit, divert or otherwise induce any current employee of the Companies to terminate or modify their employment relationship with the Companies or to have such employee(s) perform any services for or on behalf of another company.

 

c.             Construction/Enforcement.  These restrictive covenants shall be construed and enforced under the laws of the State of New Jersey.  The Company and Hertz agree that the duration and geographic scope of the restrictive covenants set forth in this Section 6 are reasonable.  It is expressly agreed that if any restrictions set forth in Section 6 are found by any Court having jurisdiction to be unreasonable because they are too broad in any respect, then and in each such case, the remaining restrictions herein contained shall nevertheless remain effective, and this Agreement, or any portion thereof, shall be considered to be amended so as to be considered reasonable and enforceable by such Court, and the Court shall specifically have the right to restrict the business, geographical or temporal scope of such restrictions to any portion of the business or geographic areas or time period described above to the extent the Court deems such restriction to be necessary to cause the covenants to be enforceable, and in such event, the covenants shall be enforced to the extent so permitted.  In the event of any breach of these restrictive covenants, Plescia recognizes that the remedies at law will be inadequate, and that regardless of any other provision contained in extended in an amount which equals the time period during which Plescia is or has been in violation of these restrictive covenants.

 

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7.             Representations of Employee.  Plescia declares and represents that he has not filed or otherwise pursued any charges, complaints, lawsuits or claims of any nature against the Companies or any of its subsidiaries, affiliates or divisions, arising out of or relating to events occurring prior to the date of this Agreement, with any federal, state or local governmental agency or court with respect to any matter covered by this Agreement.  In addition to agreeing herein not to bring suit against the Companies for events occurring prior to the date of this Agreement, Plescia agrees not to seek damages from the Companies by filing a claim or charge with any state or governmental agency.

 

8.             Future Employment.  Plescia agrees that he will not at any time in the future seek employment with Hertz and hereby waives any right that may accrue to him from any application for employment that he may make notwithstanding this provision.  By this Agreement, Plescia intends to remove himself from consideration for future employment with Hertz and agrees that execution of this Agreement shall constitute good and sufficient cause to reject any application Plescia may make for employment.  Plescia understands and agrees that he has no right to any reinstatement or re-employment by Hertz at any time.  Nothing in this Agreement, however, shall preclude Hertz from offering or providing employment to Plescia after the Termination Date.

 

9.             Nondisparagement/References.  The Parties shall refrain from making any disparaging comments about the other.  The Parties will not assist, encourage, discuss, cooperate, incite, or otherwise confer with or aid any others in discrediting the other or in pursuit of a claim or other action against the other, except as required by law.  Plescia shall direct any employment inquiries or requests for references only to LeighAnne Baker, Senior Vice President and Chief Human Resources Officer and she will provide a copy of the reference letter attached hereto as Exhibit B and will not provide any negative information regarding Plescia to any prospective employer.

 

10.           Cooperation.  Plescia agrees to cooperate fully with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company which relate to events or occurrences that occurred while Plescia was employed by the Company, including, but not limited to, any litigation and/or claims that were filed and/or asserted while Plescia was employed by the Company.  Plescia’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available for telephone conferences with outside counsel and/or Company personnel, being available for interviews, depositions, and/or to act as a witness on behalf of the Company, if requested, and at the Company’s request responding to any inquiries about the particular matter.   Plescia further agrees to cooperate fully with the Company in connection with any investigation or review by any federal, state or local regulatory authority relating to events or occurrences that transpired while Plescia was employed with the Company.

 

11.           Confidentiality.  Except as necessitated by Section 6 of this Agreement, Plescia promises not to discuss or disclose the terms of this Agreement or the amount or nature of the consideration provided to Plescia under this Agreement to any person other than his immediate family members and his attorney and/or financial advisor, should one be consulted, provided that

 

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those to whom Plescia may make such disclosure agree to keep said information confidential and not disclose it to others.

 

12.           Miscellaneous.

 

a.             Entire Agreement.  Plescia further declares and represents that no promise, inducement, or agreement not herein expressed has been made to him; that this Agreement and the exhibits attached hereto contain the entire agreement between the parties, and that the terms of this Agreement are contractual and not a mere recital.  This Agreement may not be changed unless the change is in writing and signed by Plescia and an authorized representative of Hertz.  This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which together constitute one and the same agreement, whether delivered in person, by mail, by e-mail or by facsimile.

 

b.             Withholding.  All payments and benefits provided hereunder shall be subject to applicable tax withholdings and other standard deductions.

 

c.             Denial of Wrongdoing.  The Parties understand and agree that this Agreement shall not be considered an admission of liability or wrongdoing on either part, and that the parties deny any liability and nothing in this Agreement can or shall be used by or against either party with respect to claims, defenses or issues in any litigation or proceeding except to enforce the Agreement itself.  Hertz denies committing any wrongdoing or violating any legal duty with respect to Plescia’s employment or the termination of his employment.

 

d.             Severability.  Plescia understands and agrees that should any provision of this Agreement be declared or be determined by any court to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby, and said invalid part, term, or provision shall be deemed not a part of this Agreement.

 

e.             Successors and Assigns.  This Agreement shall be binding upon the Company and it successors and assigns.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or a part of the business and/or assets of the Company to assume expressly and agree to perform all of the Company’s obligations set forth in this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or assign had taken place.

 

13.           Code Section 409A.

 

a.             Compliance.  The intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Code and, accordingly, to the maximum extent permitted, the Agreement shall be interpreted to be in compliance therewith.  In no event whatsoever shall the Company be liable for any tax, interest or penalties that may be imposed on Plescia by Section 409A of the Code or any damages for failing to comply with Section 409A.

 

b.             Termination as Separation from Service.  A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Section 409A upon or following a

 

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termination of employment until such termination is also a “separation from service” within the meaning of Section 409A and for purposes of any such provision of this Agreement, references to a “resignation,” “termination,” “terminate,” “termination of employment” or like terms shall mean separation from service.

 

c.             Payments for Reimbursements, In-Kind Benefits.  All reimbursements for costs and expenses under this Agreement shall be paid in no event later than the end of the calendar year following the calendar year in which Plescia incurs such expense.  With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (ii) the amount of expenses eligible for reimbursements or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year, provided, however, that the foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect.

 

d.             Installments as Separate Payment.  If under this Agreement, an amount is paid in two or more installments, for purposes of Section 409A, each installment shall be treated as a separate payment.

 

14.           Acceptance.  Plescia further acknowledges that he has been provided twenty-one (21) days to consider and accept this Agreement from the date it was first given to him, although he may accept it at any time within those twenty-one (21) days.

 

15.           Revocation.  Plescia further acknowledges that he understands that he has seven (7) days after signing the Agreement to revoke it by delivering to LeighAnne Baker, Senior Vice President, Chief Human Resources Officer, The Hertz Corporation, 225 Brae Boulevard, Park Ridge, New Jersey 07656, written notification of such revocation within the seven (7) day period.  If Plescia does not revoke the Agreement, the Agreement will become effective and irrevocable by him on the eighth day after he signs it (the “Effective Date”).

 

16.           Legal Counsel.  Plescia acknowledges that he understands that he has the right to consult with an attorney of his choice at his expense to review this Agreement and has been encouraged by the Companies to do so.

 

IN WITNESS HEREOF, and intending to be legally bound, I have hereunto set my hand.

 

WITH MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT AND UNDERSTAND ALL OF ITS TERMS INCLUDING THE FULL AND FINAL RELEASE OF CLAIMS SET FORTH ABOVE.

 

I FURTHER ACKNOWLEDGE THAT I HAVE VOLUNTARILY ENTERED INTO THIS AGREEMENT; THAT I HAVE NOT RELIED UPON ANY REPRESENTATION OR STATEMENT WRITTEN OR ORAL, NOT SET FORTH IN THIS AGREEMENT; THAT I HAVE BEEN GIVEN THE OPPORTUNITY TO HAVE THIS AGREEMENT REVIEWED BY MY ATTORNEY AND THAT I HAVE BEEN ENCOURAGED BY

 

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HERTZ TO DO SO.

 

I ALSO ACKNOWLEDGE THAT I HAVE BEEN AFFORDED 21 DAYS TO CONSIDER THIS AGREEMENT AND THAT I HAVE 7 DAYS AFTER SIGNING THIS AGREEMENT TO REVOKE IT BY DELIVERING TO LEIGHANNE BAKER, AS SET FORTH ABOVE, WRITTEN NOTIFICATION OF MY REVOCATION.

 

 

	
/s/   Gerald Plescia
    	
 
    	
 
    
	
 
    	
 
    
	
GERALD   PLESCIA
    	
 
    
	
 
    	
 
    
	
Date:   2/28/11
    	
 
    
	
 
    	
 
    
	
THE   HERTZ CORPORATION
    	
HERTZ   GLOBAL HOLDINGS, INC.
    
	
 
    	
 
    
	
BY:
    	
/s/ Lou Franzese
    	
 
    	
BY:
    	
LeighAnne Baker
    
	
Date: 2/28/11
    	
Date: 2/28/11
    
					

 

10Exhibit 4.1

 

Common Stock Purchase Warrant

 

BIOSANTE PHARMACEUTICALS, INC.

 

	
Warrant Shares:
    	
Initial   Exercise Date: March     , 2011
    

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,                       or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the three year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from BioSante Pharmaceuticals, Inc., a Delaware corporation (the “Company”), up to              shares (the “Warrant Shares”) of Common Stock.

 

Section 1.                                            Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated March 3, 2011, among the Company and the purchasers signatory thereto.

 

Section 2.                                            Exercise.

 

a)                                      Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto. Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary, 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 the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within 1 Business Day of receipt of such notice.  The

 

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Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

b)                                     Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be $2.25, subject to adjustment hereunder (the “Exercise Price”).

 

c)                                      Cashless Exercise.  If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder (it being understood that the Company is under no obligation to file, have declared effective or maintain the effectiveness of such a registration statement or current prospectus and shall have no liability to the Holder in the event that there is no effective registration statement or current prospectus) and all of the Warrant Shares are not then registered for resale by Holder into the market at market prices from time to time on an effective registration statement for use on a continuous basis (or the prospectus contained therein is not available for use), then this Warrant 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 certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where::

 

(A) =  the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

(B) =  the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) =  the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time), (b)  if the Common Stock is not then listed or quoted for trading on a Trading Market and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Company and reasonably acceptable to the Holders of a majority in interest of the Securities then outstanding, the fees and expenses of which shall be paid by the Company.

 

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d)                                     Mechanics of Exercise.

 

i.                                          Delivery of Certificates Upon Exercise.  Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted) (such date, the “Warrant Share Delivery Date”).   This Warrant shall be deemed to have been exercised on the first date on which all of the foregoing have been delivered to the Company.  The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid.

 

ii.                                       Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.                                    Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv.                                   Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise.  In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm

 

3

 

otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, 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 deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

v.                                      No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

vi.                                   Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form

 

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attached hereto duly executed by the 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.

 

vii.                                Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

e)                                      Holder’s Exercise Limitations.  The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other  Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination and shall have no liability for exercises of the Warrant that are in noncompliance with the Beneficial Ownership Limitation.   In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or

 

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the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing 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 or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

Section 3.                                            Certain Adjustments.

 

a)                                      Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)                                     [RESERVED]

 

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c)                                      Subsequent Rights Offerings.  If the Company, at any time while the Warrant is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to the Holder) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the VWAP on the record date mentioned below, then, the Exercise Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered (assuming receipt by the Company in full of all consideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP.  Such adjustment shall be made whenever such rights, options or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants.

 

d)                                     Pro Rata Distributions.  If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock, then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith.  In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.  Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

e)                                      Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock

 

7

 

or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, 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 which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) 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 which 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 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), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental

 

8

 

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 and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

f)                                        Calculations. All calculations under this Section 3 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 3, 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.

 

g)                                     Notice to Holder.

 

i.                                          Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

ii.                                       Notice to Allow Exercise by Holder. 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 the 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,

 

9

 

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 disclose such information in compliance with applicable securities laws.  The Holder shall remain entitled to exercise this 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.

 

Section 4.                                            Transfer of Warrant.

 

a)                                      Transferability.  Subject to compliance with applicable securities laws, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)                                     New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date set forth on the first page of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto and the warrant number.

 

c)                                      Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

10

 

 

Section 5.                                            Miscellaneous.

 

a)                                      No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i).

 

b)                                     Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)                                      Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d)                                     Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or 

 

11

 

appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e)                                      Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

 

f)                                        Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

 

g)                                     Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies.  Without limiting any other provision of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to 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 Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h)                                     Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

i)                                         Limitation of Liability.  No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of 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.

 

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j)                                         Remedies.  The Holder, 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.  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 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.

 

k)                                      Successors and Assigns.  Subject to applicable securities laws, this Warrant 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 Holder.  The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)                                         Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and Holders holding Warrants at least equal to 67% of the Warrant Shares issuable upon exercise of all then outstanding Warrants issued under the Purchase Agreement

 

m)                                   Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant 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.

 

n)                                     Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follows)

 

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

 

 

	
 
    	
BIOSANTE   PHARMACEUTICALS, INC.  
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

14

 

NOTICE OF EXERCISE

 

TO:  BIOSANTE PHARMACEUTICALS, INC.

 

(1)  The undersigned hereby elects to purchase                  Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)  Payment shall take the form of (check applicable box):

 

o in lawful money of the United States; or

 

o [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)  Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

 

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

 

 

 

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

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, [        ] all of or [              ] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

                                                                                               whose address is

 

                                                                                                                              .

 

 

	
 
    	
 
    	
Dated:                                ,
    
	
 
    	
 
    	
 
    
	
 
    	
Holder’s   Signature:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Holder’s   Address:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    
	
 
    
	
Signature Guaranteed:
    	
 
    	
 
    
						

 

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00185-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00185-of-00352.parquet"}]]