Document:

rely-ex101_6.htm

Exhibit 10.1

TERMS OF SEPARATION

			
	
1.Effective Date; Definitive Agreement:
	
 
	
·Effective August 23, 2016 (“Effective Date”).

·Parties to work together in good faith to enter into a definitive agreement reflecting these terms.  In the event the parties are unable to finalize a definitive agreement, the terms set forth in this term sheet (“Term Sheet”) will be binding on all parties.  In the event that the Release (defined below) is not delivered by September 14, 2016 or is revoked prior to the Release Effective Date (defined below), this Term Sheet and the definitive agreement contemplated herein will be null and void (other than Executive’s obligations for repayment of any sums received as provided herein).

	
2.Resignation:
	
 
	
·Executive acknowledges he no longer holds any management positions.

·Executive resigns as a member of the Board of Directors, effective as of the Effective Date, pursuant to the form of director resignation attached hereto as Exhibit A.

			
	
3.Cash Payment:
	
 
	
·$1,500,000, representing the severance benefits per Section 3.2(a)(i) of the Management Continuity Plan for Senior Officers (“Plan”), to be paid in accordance with the Plan terms (i.e., payable in equal monthly installments in accordance with the Company’s normal payroll practices over the 24-month period commencing on August 19, 2016 (the “Separation Date”), with the first payment not paid until the first payroll date following the 60th day after the Separation Date and to include all payments that otherwise would have been made within that period), with such amount secured by an irrevocable, continuing standby letter of credit, with the only condition to Executive’s ability to draw on such letter of credit being Executive’s sworn statement that a payment from the Company has not been paid in full when due and remains unpaid and specifying the amount that is due, which letter of credit shall be issued by Wells Fargo (or if Wells Fargo is unable or unwilling to issue such letter of credit, another financial institution reasonably acceptable to Executive and the Company) and delivered to Executive not later than three days following the date that Executive delivers a signed Release (defined below) to the Company; provided that Executive must promptly repay all previously received payments and forfeit any outstanding payments, if he does not execute and deliver the Release by September 14, 2016 or if he revokes all or any portion of the Release.

·$500,000 additional cash payment, payable in a cash lump sum on or before 12:00 noon on August 24, 2016 (the “Funding Time”) wired to:

UBS AG

ABA#: 026007993

UBS Financial Services Inc.

A/C#: 101WA258641000

F/C: Bouchard 10S LLC

A/C#: AB-17991-15

(A/C# AB-17991-15 must be listed for reference) 

 

provided that Executive must promptly repay such amount to the Company, if he does not execute and deliver the Release (as defined below) by September 14, 2016 or if he revokes all or any 

portion of the Release.

·Pro rata bonus per Section 3.2(b) of the Plan, paid in accordance with the Plan terms.

·Welfare benefits per Section 3.2(c) of the Plan.

·General release of claims per Exhibit A of the Plan, as modified and attached hereto as Exhibit B (the “Release”), with the date on which the Release becomes effective, the “Release Effective Date.” 

	
4.Equity Awards:
	
 
	
·Executive currently holds unvested restricted stock awards (covering 113,395 shares) that are subject solely to time-vesting.  50% of these awards will be immediately forfeited, and the balance of such awards will vest solely based upon the achievement of the performance criteria set forth in that certain TSR Performance Award Agreement, dated as of February 25, 2016 (“TSR Performance Award Agreement”); provided that in no event may Executive earn more than 100% of the shares that remain outstanding and eligible to vest (56,698 shares).  Any shares that do not vest during the applicable performance period will be immediately forfeited.  

·Executive currently holds unvested restricted stock units (“RSUs”) (covering 55,531 shares) pursuant to the TSR Performance Award Agreement.  50% of these RSUs will be immediately forfeited, and the balance of these RSUs will vest solely based upon the achievement of the performance criteria set forth in the TSR Performance Award Agreement; provided that in no event may Executive earn more than 100% of the shares that remain outstanding and eligible to vest (27,766 shares).  Any shares that do not vest during the applicable performance period will be immediately forfeited.  

·The 260,000 outstanding unvested performance shares granted pursuant to that certain Performance Share Agreement, dated as of June 1, 2015, as amended and restated May 20, 2016 (“Performance Share Agreement”), and the outstanding vested stock options granted pursuant to that certain Non-Qualified Stock Option Agreement, dated as of June 5, 2013, will remain outstanding in accordance with all of the terms and conditions of the applicable agreements.  

·Except as set forth above, Executive holds no other incentive equity of the Company.

	
5.Communications:
	
 
	
·Mutually agreed internal communications and press release, in the forms attached as Exhibit C and Exhibit D-1 to this term sheet.

·Executive may issue a press release in the form attached as Exhibit D-2.

·Executive acknowledges and agrees that the Company shall disclose Executive’s resignation as a director under Item 5.02(b) of Form 8-K.

2

			
	
6.Indemnification; D&O:
	
 
	
·Executive will continue to be indemnified and held harmless (including advances of attorneys’ fees and litigation costs in respect thereof) for all acts and omissions to act occurring during his service as an officer and a member of the Board of Directors of the Company and all subsidiaries to the maximum extent provided under the Company’s Second Amended and Restated Certificate of Incorporation (as recently filed with the SEC on June 1, 2015) and permitted under applicable law.

·Executive to be covered as an insured under the Company’s directors and officers liability insurance.

·Such indemnification and insurance coverage to apply for so long as Executive may be subject to liability for any claim covered thereunder and to the extent continued coverage is available under the existing insurance policy terms.

	
7.Professional Fees:
	
 
	
·At the Funding Time, the Company will pay Executive’s reasonable professional fees incurred to negotiate and prepare all agreements and other documents in respect of these terms, upon presentation of an invoice therefor, which payment, subject to agreement on all other terms, will not exceed $25,000 in the aggregate.

·In the event of any dispute over the Company’s or Executive’s satisfaction of its or his obligations under these terms or any other plan or agreement with Executive that survives his separation, the prevailing party (as determined by the trier of fact) will pay the other party’s attorneys’ fees and litigation costs incurred in such dispute.

3

			
			
	
8.Restrictive Covenants:
	
 
	
·The restrictive covenants set forth in the Release, the TSR Performance Award Agreement, the Performance Share Agreement and the Restricted Stock Agreement dated February 25, 2016 (collectively, the “Restrictive Covenant Agreements”) will remain in full force and effect in accordance with the terms thereof, except as set forth in this Section 8 of the Term Sheet.  The Company acknowledges that Executive is bound only by the restrictive covenants set forth in the Restrictive Covenant Agreements.    

·The terms of the Restrictive Covenant Agreements to the contrary notwithstanding, (i) the non-solicitation/no-hire restrictions will not apply to Julie Kavanaugh (Executive Assistant), (ii) all customer (and prospective customer) and employee (representative and agent) covenants will expire on December 31, 2019 and (iii) the mutual non-disparagement covenant below (and in Exhibit B) will govern over any other non-disparagement covenant.

·Parties to enter into a customary mutual non-disparagement covenant that provides that (i) Company non-disparagement covenant prohibits disparaging statements about Executive by the Company via any authorized public statement, or by any executive officer or director of the Company, and (ii) Executive non-disparagement covenant prohibits disparaging statements by Executive about the Company, any officer, any director or any beneficial owner of at least 5% of the Company’s outstanding shares of common stock.

·Executive will agree to a five year standstill provision which will prohibit Executive from acquiring shares of the Company (other than in connection with the vesting, exercise or settlement of equity incentive awards previously granted), participating in any proxy contest or similar action, proposing any extraordinary action involving the Company, making any stockholder proposal, or taking similar actions.  

·Executive hereby specifically reaffirms and acknowledges his continuing cooperation obligations under Section 12(e) of the Performance Share Agreement and Section 10.5 of the TSR Performance Award Agreement. Additionally, Executive agrees to provide transition assistance to the Interim Chief Executive Officer for up to a total of 20 hours of assistance (which may be provided remotely) over the next six weeks following the Effective Date (and provided that such assistance does not postpone Executive’s separation from service under IRC Section 409A beyond the Effective Date).

	
9.Miscellaneous: 
	
 
	
·All amounts payable hereunder will be subject to any required income tax withholding.

·This Term Sheet may be executed in counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute the entire document and may be executed by electronically scanned or “pdf” signatures.

·Governing Law and Forum:  Law: Delaware. Forum: State and federal courts of Delaware. Section 6.2 and Section 9 of the Plan shall not apply, and Section 6.1 of the Plan shall apply only for the purpose of the Plan Administrator (as defined under the Plan) discharging ministerial, and not discretionary, duties.

 

This Term Sheet and all Exhibits attached hereto are agreed to this August 23, 2016:

 

Real Industry, Inc.

4

 

 

	
	
s/s Peter C.B. Bynoe

	
By: Peter C.B. Bynoe

	
Its: Compensation Committee Chairman

	
 

	
 

	
s/s Craig T. Bouchard

Craig T. Bouchard

5

EXHIBIT A

 

Form of Director Resignation

 

August 23, 2016

 

Board of Directors of Real Industry, Inc. 

 

and 

 

Real Industry, Inc.

15301 Ventura Boulevard, Suite 400

Sherman Oaks, California 91403

 

Ladies and Gentlemen:

 

I, Craig T. Bouchard, hereby voluntarily and irrevocably resign from my position as a member of the board of directors of Real Industry, Inc., a Delaware corporation (the “Company”), and from each and every office and position I hold with any direct or indirect subsidiary of the Company.    

 

My resignation shall take effect immediately without the need for acceptance or any further action by any other party or the occurrence of any other event. 

 

This resignation may be executed and transmitted by PDF or other form of electronic transmission, and any signature on a PDF or other form of electronic transmission shall be considered an original for all purposes and shall be fully enforceable.

 

 

	
 
	
 
	
 
	
Sincerely,
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
Craig T. Bouchard
	
 

 

 

 

Exh. A-1

EXHIBIT B

 

Form of General Release

 

This Agreement and General Release (the “Agreement”) is made and entered into this ____ day of _________, 20__, by and between (“Executive”) and Real Industry, Inc. (the “Company”).

1.Released Parties. The term “Released Parties”, as used in this Agreement, shall mean the Company and its subsidiaries and its affiliates (and any successors thereto) (the “Company Group”) and any of its respective past or present employees, representatives, administrators, agents, officials, officers, directors, shareholders, divisions, parents, subsidiaries, predecessors, successors, affiliates, general partners, limited partners, consultants, employee benefit plans (and their sponsors, fiduciaries, or administrators), insurers, or attorneys.

2.General Release. Executive, on behalf of [himself/herself] and [his/her] agents, representatives, attorneys, assigns, heirs, executors, and administrators, fully releases and forever discharges each of the Released Parties from any and all liability, claims, demands, actions, causes of action, suits, grievances, debts, sums of money, agreements, promises, damages, back and front pay, costs, expenses, attorneys’ fees, and remedies of any type, regarding any act or failure to act that occurred up to and including the date on which Executive signs this Agreement, including, without limitation, any claims arising or that arose or may have arisen out of or in connection with Executive’s employment, or [his/her] separation of employment from the Company Group, and including but not limited to: 

all claims, actions or liability under: (1) Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866 (42 U.S.C. §1981), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act, the Fair Labor Standards Act, the National Labor Relations Act, the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act, the California Family Rights Act, California wage laws; and (2) any other federal, state, or local statute, ordinance, or regulation regarding employment, compensation, unpaid wages, employee benefits, termination of employment, or discrimination in employment; and (3) the common law of any state relating to employment contracts, wrongful discharge, defamation, tort or any other matter.

Executive acknowledges that in exchange for this release, [he/she] has received separate consideration beyond that to which Executive is otherwise entitled under Company policy or applicable law. Employee specifically agrees and acknowledges that [he/she] has received all wages and other compensation owed to her by the Company.

Executive also specifically acknowledges that [he/she] is aware of and familiar with the provisions of California Civil Code Section 1542, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THIS RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

Executive, being aware of Civil Code Section 1542, hereby expressly waives and relinquishes all rights and benefits [he/she] may have thereunder, as well as under any other statutory or common law principles of similar effect.

3.Covenant Not To Sue. Except for an action arising out of a breach of the terms of this Agreement or failure to provide benefits under the Real Industry, Inc. Severance Plan for Senior Officers (the “Plan”), Executive agrees never to bring (or cause to be brought) any claim, action or proceeding against the Company Group or any of the other Released Parties regarding any act or failure to act that 

Exh. B-1

occurred up to and including the date on which the parties sign this Agreement, including but not limited to any claim, action or proceeding relating to Executive’s employment or [his/her] separation of employment from the Company Group.

4.Nonsolicitation; Confidential Information, etc. Executive hereby acknowledges that, during and solely as a result of Executive’s employment by the Company Group, Executive has received and will continue to receive special training and education with respect to the operations of such entity(ies) and access to confidential information and business and professional contacts, all of which is exceptionally valuable to the Company Group and vital to the success of the Company Group’s business and other related matters. In consideration of the severance benefits payable to Executive pursuant to the Plan, Executive hereby agrees to be bound by and acknowledges the reasonableness of the following covenants, which are specifically relied upon by the Company in entering into this Agreement. Executive acknowledges and agrees that each of the individual provisions of this Section 4 constitutes a separate and distinct obligation of Executive to the Company Group, individually enforceable against Executive.

(a)Covenant Not to Solicit Employees. For the period during which Executive receives salary continuation payments under the Plan (the “Restricted Period”), Executive agrees and covenants that [he/she] shall not, for any reason, directly or indirectly, employ, solicit or endeavor to entice away from the Company Group (whether for Executive’s own benefit or on behalf of another person or entity), or facilitate the solicitation, employment or enticement of, any employee of the Company Group to work for Executive, any affiliate of Executive or any competitor of the Company Group, nor shall Executive otherwise attempt to interfere (to the Company Group’s detriment) in the relationship between the Company Group and any such employees.

(b)Covenant Not to Solicit Customers. During the Restricted Period, Executive agrees and covenants that [he/she] shall not, directly or indirectly, in any form or manner, contact, solicit, or facilitate the contacting or solicitation of, any Customer of the Company Group for the purpose of competing with its business. For purposes of this Agreement, the term “Customer” shall mean and refer to each person, entity, municipality or other governmental entity that has a contract with or is actively being solicited by the Company Group to engage in services within the scope of its business.

(c)Covenant of Confidentiality. For a period of five (5) years after the termination of Executive’s employment with the Company Group, for any reason, Executive shall not, except in furtherance of the Business of the Company Group or otherwise with the prior authorization of the Company, in any form or manner, directly or indirectly, divulge, disclose or communicate to any person, entity, firm, corporation or any other third party (other than in the course of Executive’s employment or engagement), or utilize for Executive’s personal benefit or for the benefit of any competitor or customer of the Company Group any Confidential Information. For purposes of this Agreement, “Confidential Information” shall mean, but shall not be limited to, any technical or non-technical data, formulae, patterns, compilations, programs, devices, methods, techniques, drawings, designs, processes, procedures, improvements, models or manuals of any member of the Company Group or which are licensed by any member of the Company Group, any financial data or lists of actual or potential customers or suppliers (including contacts thereat) of the Company Group, and any information regarding the contracts, marketing and sales plans, which is not generally known to the public through legitimate origins of the Company Group. The parties hereto each acknowledge and agree that such Confidential Information is extremely valuable to the Company Group and shall be deemed to be a “trade secret.” In the event that any part of the Confidential Information becomes generally known to the public through legitimate origins (other than by the breach of this Agreement by Executive or by misappropriation), or is required to be disclosed by legal, administrative or judicial process (provided that Executive has provided to the Company reasonable prior notice of such request and the Company has had a reasonable opportunity, at its expense, to dispute, defend or limit such request for the Confidential Information), that part of the Confidential Information shall no longer be deemed Confidential Information for purposes of this Agreement, but Executive shall continue to be bound by the terms of this Agreement as to all other Confidential Information.

Exh. B-2

(d)Return of Property. Upon termination of Executive’s employment, Executive shall promptly deliver to the Company Group all correspondence, drawings, blueprints, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents or any other documents, including all copies in any form or media, concerning the Company Group’s Customers, marketing strategies, products or processes which contain any Confidential Information.

(e)Equitable Remedies. In the event that Executive breaches any of the terms or conditions set forth in this Section 4 (collectively, the “Restrictive Covenants”), Executive stipulates that such breach will result in immediate and irreparable harm to the business and goodwill of the Company Group and that damages, if any, and remedies at law for such breach would be inadequate. The Company Group shall therefore be entitled to seek for and receive from any court of competent jurisdiction a temporary restraining order, preliminary and permanent injunctive relief and/or an order for specific performance to protect its rights and interests and to restrain any violation of this Agreement and such further relief as the court may deem just and proper, each without the necessity of posting bond. Following judgment or other final determination by such court, the non-prevailing party in such proceeding shall pay the costs and expenses (including court costs and reasonable attorneys’ fees) of the prevailing party. The Company Group may elect to seek such remedies at its sole discretion on a case by case basis. Failure to seek any or all remedies in one case shall not restrict the Company Group seeking any remedies in another situation. Such action by the Company Group shall not constitute a waiver of any of its rights.

(f)Continuing Obligation. The obligations, duties and liabilities of Executive pursuant to Sections 4(a), 4(b), 4(c) and 4(d) of this Agreement are continuing, and for the periods set forth in such provisions hereof are absolute and unconditional, and shall survive and remain in full force and effect as provided in each such Section. Notwithstanding anything else contained in this Agreement to the contrary, the parties hereto agree that in the event, and at the moment, Executive breaches any of the terms, duties or obligations contained in Sections 4(a), 4(b) and 4(c) of this Agreement, then any payments or benefits paid to Executive pursuant to the Plan shall be returned to the Company Group and all amounts or benefits payable to Executive pursuant to the Plan shall be forfeited.

5.Non-Disparagement. Executive agrees not to make any oral or written statement to any third party that disparages, defames, or reflects adversely upon the Company Group, its products, services, employees, past or present directors, or beneficial owners of at least 5% of the Company’s outstanding shares of common stock.  The Company agrees not to, and to cause its executive officers and directors not to, make any oral or written statement to any third party that disparages, defames, or reflects adversely upon Executive.  The foregoing shall not be violated by truthful statements in response to (i) disparaging statements made by the other party, (ii) legal requirements or process, (iii) required governmental testimony or filings, or (iv) administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings), and the foregoing limitation on the Company and its executives and directors shall not be violated by statements that they in good faith believe are necessary or appropriate to make in connection with performing their duties and obligations to the Company. Executive understands that nothing contained in this Agreement limits Employee’s ability to file a charge or complaint with the Securities and Exchange Commission (“SEC”). Executive further understands that this Agreement does not limit Executive’s ability to communicate with the SEC or otherwise participate in any investigation or proceeding that may be conducted by the SEC, including providing documents or other information, without notice to the Company. This Agreement does not limit Executive’s right to receive an award for information provided to the SEC.

6.Governing Law. This Agreement shall be interpreted, construed and constructed in accordance with the laws of the State of Delaware without regard to its conflicts of law provisions, except as may be superseded by applicable laws of the United States.

7.Severability. In the event that any provision of this Plan shall be held illegal, invalid or unenforceable for any reason, such provision shall be fully severable, but shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if the illegal, invalid, or unenforceable provision was not included herein.

Exh. B-3

8.ADEA Waiver. Executive acknowledges that [he/she] has been advised in writing to consult with an attorney prior to executing this Agreement, which contains releases and waivers. Executive understands that [he/she] may take a period of twenty-one (21) days within which to consider this Agreement. Executive understands that [he/she] may revoke this Agreement during the seven (7) days following the execution of this Agreement and that the Agreement will not become effective until that seven-day revocation period has expired. In order to revoke the Agreement, Executive must sign and send a written notice to the Company addressed to 15301 Ventura Blvd., Suite 400, Sherman Oaks, CA 91403 (attention: Chief Financial Officer), with a copy to the Secretary of the Company or to such other designee of the Company, which shall only be effective if the Company receives it no later than seven (7) days after Executive signs the Agreement. If Executive revokes the Agreement, [he/she] will not be entitled to any of the money, benefits or other consideration provided to [him/her] under the Plan.

9.Knowing and Voluntary Waiver. Executive acknowledges that: (a) [he/she] has carefully read this Agreement and fully understands its meaning and effect; (b) [he/she] had a full and adequate opportunity and reasonable time period to review this Agreement with an attorney of [his/her] choosing before [he/she] signed it; (c) [he/she] was not coerced into signing the Agreement; (d) [he/she] agrees to all the terms of the Agreement and is entering into the Agreement knowingly, voluntarily, and with full knowledge of its significance; and (e) the only consideration for [his/her] signing the Agreement are the terms stated herein, and no other promises or representations of any kind have been made by any person or entity to cause [him/her] to sign the Agreement.

10.Counterpart Execution. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute the entire document.

 

	
 
	
 
	
 
	
REAL INDUSTRY, INC.
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
 
	
 

	
[Executive Name]
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
Dated:
	
 
	
 
	
Dated:
	
 
	
 

 

 

 

 

Exh. B-4

EXHIBIT D-1

 

Company Press Release

 

 

REAL INDUSTRY Announces Leadership change

 

Company to host conference call at 12:00 PM eT 

 

SHERMAN OAKS, Calif., August 22, 2016 -- Real Industry, Inc. (NASDAQ: RELY) (“Real Industry” or the “Company”) today announced that Mr. Craig T. Bouchard, formerly Chairman and Chief Executive Officer of the Company, has stepped down from the Company. The Company’s Board of Directors has elected Mr. Kyle Ross, the Company’s Chief Financial Officer, as President, Interim Chief Executive Officer, and Chief Investment Officer and has elected Mr. William Hall as Chairman of the Board.  

 

Mr. Hall noted, “Craig has been instrumental in leading Real Industry’s growth and development as a Nasdaq-listed public company, and we thank him for his leadership and dedication. Craig and the Board of Directors mutually agreed that this is the right time for a leadership transition now that the Real Alloy integration is complete. The Board is confident that Real Industry’s executive management team of committed and experienced professionals, including Kyle, John Miller (Executive VP of Operations), Terry Hogan (President of Real Alloy) and Michael Hobey (Chief Financial Officer of Real Alloy), possess the knowledge and expertise to deliver strong stockholder value by executing and integrating strategic acquisitions, by growing our Real Alloy business and by maximizing the value of our unique tax assets.  We wish Craig the very best in his future endeavors.”

 

Mr. Ross, who will continue to serve as the Company’s Chief Financial Officer until a replacement is appointed, stated, “I appreciate the Board’s support and their vote of confidence by electing me as Interim Chief Executive Officer. I am excited about the road ahead. Our vision and strategy for Real Industry remain unchanged.  Real Alloy is an excellent company, and we will enhance our focus on expanding its leading global market position in aluminum recycling while seeking new businesses in which to leverage our NOLs, with a critical focus on allocating capital wisely. I look forward to working with our talented employees to lead Real Industry in its next phase of development.”

 

The Board elected Mr. Ross as President, Interim Chief Executive Officer, and Chief Investment Officer and has no current plan to search for a permanent CEO.  Mr. Ross has served as the Chief Financial Officer of Real Industry since March 2011 and as an Executive Vice President since June 2010. Mr. Ross was part of the management team that sponsored Fremont General Corporation’s (“Fremont”) reorganization process and emergence from bankruptcy. During his executive tenure with the Company and its predecessor, Mr. Ross led the process to regain compliance with the SEC after emergence from bankruptcy; he led the acquisition, growth and successful divestiture of its NABCO subsidiary; he played a leading role in the due diligence and 

Exh. D-1-1

financing of the Real Alloy acquisition; has been intimately involved in Real Alloy’s integration; and has been instrumental in all of Real Industry’s finance and M&A activities. Mr. Ross holds a Bachelor of Science degree and a Bachelor of Arts degree from the Haas School of Business and the College of Letters and Science, respectively, at the University of California, Berkeley.

 

Mr. Hall commented, “Kyle is an energetic, fact-based leader who will execute and enhance our corporate strategy to grow long-term stockholder value at Real Industry. The Board is excited to be working with Kyle and our 1,700 employees as we take Real Industry to the next level.”

 

Mr. Hall, who was first elected to Real Industry’s Board in May 2015, has thirty-five years of experience as a senior executive in public companies, including Falcon Building Products (CEO), Fruit of the Loom (President/COO), and Cummins (Executive VP), and in private companies with public securities, including Eagle Industries (CEO). Mr. Hall’s expertise is in industrial operations, mergers and acquisitions, and corporate strategy.  He has served on the boards of directors for thirteen public companies. 

 

In connection with the Board of Directors decision to separate the Chairman and Chief Executive Officer positions, the Board also determined that there was no longer a need for the role of Lead Independent Director. Mr. Philip Tinkler, the former Lead Independent Director, remains the Chairman of the Nominating and Governance Committee and a member of the Audit Committee. 

 

Conference Call Details

The Company will discuss today’s announcement in a conference call on Monday, August 22, 2016, at 12:00 pm ET.

 

Call Participants

Kyle Ross, President, Interim Chief Executive Officer, Chief Investment Officer and Chief Financial Officer of Real Industry

William (Bill) Hall, Chairman of the Board

Terry Hogan, President of Real Alloy

John Miller, Executive Vice President of Operations of Real Industry

 

Dial-in Numbers

	
 
	
·
	
(877) 407-9163 (Toll-free U.S. & Canada)

 

	
 
	
·
	
(412) 902-0043 (International)

 

Webcast Access

Participants may also access the live call via webcast at http://realindustryinc.equisolvewebcast.com/8-22-16-PR. The webcast will be archived and accessible for approximately 30 days.

 

About Real Industry, Inc.

Real Industry is a North America-based holding company seeking to take significant ownership stakes in large, well-managed and consistently profitable businesses concentrated primarily in the United States industrial and commercial marketplace. Real Industry has significant capital resources, and U.S. federal net operating loss tax carryforwards of more than $870 million. For more information about Real Industry, visit its corporate website at www.realindustryinc.com. 

 

Exh. D-1-2

Cautionary Statement Regarding Forward-Looking Statements

This release contains forward-looking statements, which are based on our current expectations, estimates, and projections about the Company’s and its subsidiaries’ businesses and prospects, as well as management’s beliefs, and certain assumptions made by management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “should,” “will” and variations of these words are intended to identify forward-looking statements. Such statements speak only as of the date hereof and are subject to change. The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason. These statements include, but are not limited to, statements regarding the management team’s ability to deliver strong shareholder value by executing and integrating strategic acquisitions, by growing our Real Alloy business and by maximizing the value of our unique tax asset; statements relating to the execution and enhancement of our corporate strategy to grow long-term shareholder value at Real Industry; and any statements or assumptions underlying any of the foregoing. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Accordingly, actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such a difference include, but are not limited to, changes in domestic and international demand for recycled aluminum; the cyclical nature and general health of the aluminum industry and related industries; commodity price fluctuations and our ability to enter into effective commodity derivatives or arrangements to effectively manage our exposure to such commodity price fluctuations; inventory risks, commodity price risks, and energy risks associated with Real Alloy’s buy/sell business model; our ability to service, and the high leverage associated with, our indebtedness, and compliance with the terms of the indebtedness, including the restrictive covenants that constrain the operation of our business and the businesses of our subsidiaries; our ability to successfully identify, acquire and integrate additional companies and businesses that perform and meet expectations after completion of such acquisitions; our ability to achieve future profitability; our ability to control operating costs and other expenses; that general economic conditions may be worse than expected; that competition may increase significantly; changes in laws or government regulations or policies affecting our current business operations and/or our legacy businesses, as well as those risks and uncertainties disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Real Industry, Inc.’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 14, 2016, and subsequent Forms 10-Q, including the “Risk Factors” therein, as well as the Company’s other SEC filings, which are available on our website at www.realindustryinc.comand on the SEC website at https://www.sec.gov.

 

Contact  

Real Industry, Inc.  

Jeff Crusinberry, Senior Vice President and Treasurer  

(805) 435-1255  

investor.relations@realindustryinc.com

 

 

 

Exh. D-1-3

EXHIBIT D-2

 

Executive Press Release

 

CRAIG BOUCHARD RESIGNS FROM BOARD OF DIRECTORS OF REAL INDUSTRY INC.

 

CHICAGO, IL (August 23, 2016) Serial entrepreneur Craig Bouchard today announces he will be resigning from the Board of Directors of Real Industry Inc.

 

"I want to thank the management team and all employees who worked tirelessly to grow the company from $40 million of annual revenue to roughly $1.4 billion of annual revenue on two continents over the past two years,” states Bouchard. “The Board of Directors and I share a different vision for the path of growth going forward but I will continue as a significant shareholder and supporter of the Real Industry team."  

 

--------------------------------------------------------------------------------------------------------------------

Craig Bouchard serves as the Chairman of the Board and Chief Executive Officer of Cambelle-Inland, LLC. 

 

Bouchard founded Shale-Inland LLC in 2010, and served as its Chairman until February 2013. During that time Shale-Inland grew its revenues from $10 million annually to over $800 million annually. 

 

Bouchard co-founded the company that became Esmark, Inc. in 2003. Esmark grew its revenues from $4 million that year to nearly $4 billion annually by 2008, and was sold to AO Severstal for $1.25 billion that year. Esmark executed the first “reverse hostile tender merger” in Wall Street history. 

 

Bouchard is a New York Times best-selling author for The Caterpillar Way: Lessons in Leadership, Growth and Shareholder Value by McGraw Hill, Copyright 2013 (James V. Koch co-author)

As a hobby, Bouchard’s The Adventures of Ai was one of the world’s popular children’s book projects of 2014. The book was translated into Japanese, Mandarin, Simplified Chinese, Spanish and Arabic, with the accompanying video game, achieving 200,000 downloads globally on Apple iTunes, Google Play and Samsung. The project was supported by 18 children’s charities around the world. 

www.craigbouchard.com

 

 

 

Contact:  Daphne Ortiz

Statement PR

323.864.9890

daphne@statementpr.net

 

Exh. D-2-1ex4-1.htm

Exhibit 4.1

 

COMMON STOCK PURCHASE WARRANT

 

sophiris bio inc.

 

 

	
Warrant Shares: 
	
Initial Exercise Date: 

                             

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant” and the term “Warrants” below refers to this Warrant and all other warrants to purchase Common Stock originally issued by the Company on the date hereof) 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 five year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Sophiris Bio Inc., a British Columbia corporation (the “Company”), up to          shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). 

 

Section 1.     Definitions. In addition to the terms defined elsewhere in this Warrant, for all purposes of this Warrant, the following terms have the meanings set forth in this Section 1:

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act. 

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common shares of the Company, no par value per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

 

 

1

 

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Subsidiary” means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTCQB or OTCQX (or any successors to any of the foregoing).

 

“Transfer Agent” means Computershare Investor Services Inc., the current transfer agent of the Company, and any successor transfer agent of the Company.

 

Section 2.     Exercise.

 

a)     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 (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”) and, within one (1) Trading Day of the date said Notice of Exercise is delivered to the Company, payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or, if available, pursuant to the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. 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 one (1) Business Day of receipt of such notice. The 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.

 

 

 

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b)     Exercise Price. The exercise price per share of the Common Stock under this Warrant shall be $4.00, 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, 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 number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the last VWAP immediately preceding the time of delivery of the Notice of Exercise giving rise to the applicable “cashless exercise”, as set forth in the applicable Notice of Exercise (to clarify, the “last VWAP” will be the last VWAP as calculated over an entire Trading Day such that, in the event that this Warrant is exercised at a time that the Trading Market is open, the prior Trading Day’s VWAP shall be used in this calculation);

 

(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.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised.  The Company agrees not to take any position contrary to this Section 2(c).

 

“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 OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, 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 (d) 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 holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company. 

 

 

 

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d)     Mechanics of Exercise. 

 

i.     Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account 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 of a certificate, registered in the Company’s share register 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 to the address specified by the Holder in the Notice of Exercise by the date that is one (1) Trading Day after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares; provided payment of the aggregate Exercise Price (other than in the case of a Cashless Exercise) is received within one Trading Day of delivery of the Notice of Exercise. If the Company fails for any reason (other than reasons related to the Holder’s inability or unwillingness to receive the Warrant Shares) to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share 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 subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $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 Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable.

 

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 Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the 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.

 

 

 

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iii.     Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder 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 Warrant Shares 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 the Warrant Shares in accordance with the provisions of Section 2(d)(i) above 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 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 shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

 

 

5

 

 

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 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 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 Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that 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 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. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

 

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

 

 

 

6

 

 

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 (such Persons, “Attribution Parties”)), 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 and Attribution Parties 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 or Attribution Parties 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 or Attribution Parties.  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 Attribution Parties) 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 Attribution Parties) 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. 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 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 or Attribution Parties 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 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 increase in the Beneficial Ownership Limitation 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.

 

 

 

7

 

 

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 shareholders 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)     Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares 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 which 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 on exercise hereof, including without limitation, the Beneficial Ownership Limitation) 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 shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). 

 

c)     Pro Rata Distributions. During such time as this Warrant is outstanding, if 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 or options 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 on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of 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, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

 

 

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d)     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 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. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, concurrently with, the consummation of the Fundamental Transaction, the Company shall purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction. The Company shall be required to give at least 20 days prior written notice of the occurrence of such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be 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 Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. 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 in accordance with the provisions of this Section 3(d) 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 Transaction, the provisions of this Warrant 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.

 

 

 

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e)     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.

 

f)     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 deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares 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 shareholders 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 delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 10 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 deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant 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 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.

 

 

 

10

 

 

Section 4.     Transfer of Warrant.

 

a)     Transferability. Subject to applicable 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. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. 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 of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto. 

 

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.

 

 

 

11

 

 

Section 5.     Miscellaneous.

 

a)     No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. 

 

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 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). 

 

 

 

12

 

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (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)     Governing Law; Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. 

 

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 the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, 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 the 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 Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

h)     Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or email attachment at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email attachment on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. All such notices and/or communications shall be sent to the Company at the address listed on the signature page hereto and to the Holder at the address on the Company records, or at such other address as the Company or Holder may designate by ten days’ advance written notice to the other party hereto. To the extent that any notice provided pursuant to this Warrant constitutes, or contains, material, non-public information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

 

 

 

13

 

 

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

 

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 the Holder.

 

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.

 

o)     Acceptance. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

 

 

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

 

(Signature Page Follows)

 

 

14

 

 

 

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.

 

	
sophiris bio inc.

 

	
By:__________________________________________

     Name:

     Title:

 

 

	
Address:

 

1258 Prospect Street

La Jolla, CA 92037

	  

 

 

 

15

 

 

NOTICE OF EXERCISE

 

To:     sophiris bio 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):

 

[ ] in lawful money of the United States; or

 

[ ] [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 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:

 

_______________________________

 

_______________________________

 

_______________________________

 

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

 

 

 

 

 

 

 EXHIBIT B

 

 

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	
Name:
	______________________________________
	  	
(Please Print)

 

	
Address:
	______________________________________
	
 

 

Phone Number:

 

Email Address: 
	
(Please Print)

 

______________________________________

 

______________________________________

	
 

Dated: _______________ __, ______
	  
	
 

Holder’s Signature:  _____________________________________
	  
	
 

Holder’s Address:  ______________________________________

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