Document:

MD Filed by Filing Services Canada Inc.  (403) 717-3898

 

 

Exhibit 4.42

INDEMNITY AGREEMENT 

THIS INDEMNITY AGREEMENT (this “Agreement”) is entered into and shall be effective as of this •th day of •, 20••.

BETWEEN:

NXT ENERGY SOLUTIONS INC., a corporation incorporated pursuant to the laws of the Province of Alberta, having its head office in the City of Calgary in the Province of Alberta (the "Corporation");

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[Name of Officer or Director], an individual residing in the of the City of Calgary, in the Province of Alberta (the "Indemnified Party");

RECITALS:

1.

The Indemnified Party is, or has agreed to act as, a director or officer of the Corporation and/or is acting or may, at the Corporation's request, act in an Authorized Capacity of Another Entity and the Corporation wishes the Indemnified Party to serve or continue in such capacity; and

2.

In order to induce the Indemnified Party to serve or continue to provide services to the Corporation or Another Entity, the Corporation wishes to provide for the indemnification of, and advancement of expenses to, the Indemnified Party to the maximum extent permitted by applicable law. 

NOW THEREFORE, in consideration of the premises and mutual covenants herein contained, and in consideration of the Indemnified Party agreeing to act, or to continue to act, as a director or officer of the Corporation or in an Authorized Capacity with Another Entity, the Corporation and the Indemnified Party do hereby covenant and agree as follows:

1.

Definitions

1.1

As used in this Agreement, including the Recitals:

(a)

"Act" means the Canada Business Corporations Act;

(b)

"Advance" means an advance of Expenses by the Corporation to the Indemnified Party pursuant to Section 3;

(c)

"Another Entity" means a corporation, partnership, joint venture, trust or unincorporated association or organization for which the Indemnified Party serves in an Authorized Capacity at the request of the Corporation;

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(d)

"Authorized Capacity" means a director or officer, or a similar capacity, of a Another Entity;

(e)

"By-Laws" means the by-laws of the Corporation;

(f)

"Court" means the Court of Queen's Bench of the Province of Alberta;

(g)

"Expenses" means all costs, charges and expenses incurred by the Indemnified Party in respect of any Proceedings including, without limitation, reasonable fees and disbursements of counsel and other professional fees and out-of-pocket expenses for attending discoveries, trials or hearings and meetings to prepare for such proceedings, but shall not include Loss;

(h)

"Liabilities" means the Expenses and Loss incurred by the Indemnified Party in respect of any Proceedings;

(i)

"Loss" means amounts which the Indemnified Party is legally obligated to pay as a result of a Proceeding against the Indemnified Party including amounts paid to settle an action or satisfy a judgment or to satisfy any fines or penalties levied in respect of such Proceedings, but shall not include Expenses; and

(j)

"Proceedings" means any threatened, pending or completed civil, criminal, administrative, investigative or other proceeding (including formal and informal inquiries and hearings), whether or not charges have been laid against the Corporation or Another Entity or the Indemnified Party, in which the Indemnified Party is involved by reason of the Indemnified Party's association with the Corporation or Another Entity, or by reason of anything done or not done by the Indemnified Party in the capacity as a director or officer of the Corporation or in an Authorized Capacity with Another Entity.

2.

Indemnification

2.1

Except in respect of an action referred to in Section 2.2 and subject to Section 2.3, the Corporation shall indemnify and save harmless the Indemnified Party from and against all Liabilities, actually and reasonably incurred by the Indemnified Party in respect of any Proceedings if:

(a)

the Indemnified Party acted honestly and in good faith with a view to the best interests of the Corporation or Another Entity, as the case may be; and

(b)

in the case of a criminal or administrative action or proceeding that is enforced in whole or in part,  by a monetary penalty, the Indemnified Party had reasonable grounds for believing that the Indemnified Party's conduct was lawful.

2.2

In respect of any action by or on behalf of the Corporation or Another Entity to procure a judgment in its favour, to which the Indemnified Party is made a party by reason of being or having been a director or officer of the Corporation or serving in an Authorized Capacity with Another Entity, or by reason of anything done or not done by the Indemnified Party in any such
capacity, the Corporation shall, with the prior approval of the Court, indemnify and save harmless the Indemnified Party against all Expenses actually and reasonably incurred by the Indemnified Party in connection with such Proceedings if the Indemnified Party fulfils the conditions set out in Sections 2.1(a) and (b) above.  The Corporation agrees to make application to the Court for approval of such indemnification and to use reasonable commercial efforts to obtain approval to such indemnification. 

 

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2.3

For the purposes of this Agreement, the termination of any Proceedings by judgment, order, settlement or conviction, or similar or other result shall not, of itself, (unless specifically found or determined otherwise) create any presumption for the purposes of this Agreement that the Indemnified Party did not act honestly and in good faith with a view to the best interests of the Corporation or Another Entity, as the case may be, or that, in the case of a criminal or administrative action or proceeding that is enforced by monetary penalty, the Indemnified Party did not have reasonable grounds for believing that the Indemnified Party's conduct was lawful, unless the judgement or order of the court or other competent authority shall specifically find otherwise.  

2.4

In respect of any claim for indemnification pursuant to this Agreement, the Indemnified Party shall be presumed to have acted honestly and in good faith and with a view to the best interests of the Corporation or Another Entity, as the case may be, and, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, to have had reasonable grounds for believing that his conduct was lawful, unless otherwise specifically determined by a court or other competent authority.

2.5

If the Indemnified Party is entitled under this Agreement to a portion but not all of the benefit of the indemnification provided hereunder, the Corporation shall indemnify the Indemnified Party for the portion thereof to which the
Indemnified Party is determined to be entitled.

3.

Advance Of Expenses

3.1

The Corporation shall advance moneys to the Indemnified Party for Expenses of the Indemnified Party reasonably incurred in respect of any Proceedings referred to in Section 2.1, as may be appropriate to enable the Indemnified Party to properly investigate, defend, participate in or appeal such Proceedings.

3.2

In the event that it is ultimately determined that the Indemnified Party was not entitled to be indemnified, or was not entitled to be fully indemnified, for any Liabilities in any Proceedings in respect of which Advances have been made under Section 3.1 the Indemnified Party shall reimburse the Corporation for such Advances or portion of such Advances.

3.3

An Advance shall be made by the Corporation upon receipt of:

(a)

a written request for an Advance containing sufficient detail of the Proceedings and Expenses to enable the Corporation to determine whether and the extent to which the Indemnified Party is entitled to an Advance;

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(b)

copies of all receipts, invoices and other supporting material reasonably required by the Corporation (including in the case of legal or other professional advisors, a detailed description of the services rendered) in respect of the Expenses;

(c)

a written acknowledgement of the Indemnified Party's obligation to reimburse the Corporation for the amount of all Advances if it is determined that the Indemnified Party was not entitled to be indemnified or fully indemnified for Expenses in respect of which Advances were made by the Corporation; and

(d)

a written affirmation that, based on facts known to the Indemnified Party and in relation to the matter giving rise to the request for the Advance, the Indemnified Party in good faith believes that the Indemnified Party:

(i)

acted honestly and in good faith with a view to the best interests of the Corporation or, as the case may be, to the best interests of Another Entity for which the Indemnified Party acted in an Authorized Capacity; and

(ii)

in the case of a criminal or administrative proceeding that is enforced by a monetary penalty, the Indemnified Party had reasonable grounds for believing that his or her conduct was lawful.

3.4

The Corporation shall make such Advance within 30 days of receipt of all such required material.

3.5

The Corporation may at its sole discretion provide Advances for future Expenses.

3.6

The Corporation shall only be required to make an Advance to the extent that it is reasonable in the circumstances and shall be entitled to contest in good faith the reasonableness of any portion of a request for an Advance.

4.

Insurance

4.1

The Corporation represents to the Indemnified Party that, as of the date of this Agreement, the Corporation has an existing directors' and officers' liability insurance policy in full force and effect and that the Indemnified Party is included as an insured person under such policy.  

4.2

The Corporation shall from time to time make a good faith determination whether or not it is practicable for the Corporation to obtain or maintain such insurance coverage.  Among other considerations, the Corporation will weigh the costs of obtaining such insurance against the protection afforded by such coverage.  If insurance is obtained, the Corporation agrees to use its best commercial efforts to maintain the Indemnified Party as an insured person under such policy with the same rights and benefits, subject to the same limitations, as are accorded the most favourably insured of the Corporation's directors and officers.

4.3

Notwithstanding the foregoing, the Corporation shall have no obligation to obtain or maintain such insurance if the Corporation determines in good faith that such insurance is not reasonably available, if the premiums are too high or if the coverage provided is limited by
exclusions so as to provide insufficient benefit.  The Corporation shall promptly notify the Indemnified Party in the event that a determination is made not to continue to maintain such insurance or if a change is made in such policy which would have a material effect on the coverage available to the Indemnified Party. 

 

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4.4

The obligation of the Corporation to make payments to the Indemnified Party under this Agreement and the timing of such payments shall not be affected or reduced by any limitations, policy limits or deductible amounts contained in any insurance carried by the Corporation or whether the Corporation has in fact received payment from the insurer.

5.

Indemnification Procedures

5.1

If any Proceeding is brought or asserted against or involves the Indemnified Party, the Indemnified Party shall promptly notify the Corporation of the nature and details of such Proceeding as soon as the Indemnified Party is notified of such Proceeding (provided that any failure to so notify promptly shall relieve the Corporation of liability under this Agreement only to the extent that such failure prejudices the ability to defend such claim).

5.2

If, at the time of the receipt of such notice, the Corporation has directors' and officers' liability insurance in effect, the Corporation shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

5.3

The Corporation shall be entitled to assume the defence or representation of the Indemnified Party in any such Proceeding through legal counsel selected by the Corporation reasonably acceptable to the Indemnified Party.  If any other similarly indemnified persons are also a party to, or involved in any such Proceeding, the Corporation may employ counsel to represent jointly the Indemnified Party and such other persons.  After retention of counsel by the Corporation, the Corporation shall not be liable to the Indemnified Party under this Agreement for any fees and expenses of counsel subsequently incurred by the Indemnified Party with respect to the same Proceeding, provided that:

(a)

the Indemnified Party shall have the right to employ his or her own counsel at the Indemnified Party's own expense (which shall not qualify as Expenses); and

(b)

the Indemnified Party shall have the right to retain his or her own counsel at the Corporation’s expense (which shall qualify as Expenses) if:   

(i)

the employment of counsel by the Indemnified Party has been previously authorized by the Corporation, 

(ii)

the Indemnified Party shall have been advised by counsel that there is a potential conflict in the joint representation referred to above and such joint representation would be precluded under applicable standards of professional conduct then prevailing in the jurisdiction in which such Proceedings are being conducted, or 

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(iii)

the Corporation shall not continue to retain counsel to assume the defence of such Proceedings. 

If the Indemnified Party elects to retain counsel in any Proceeding in respect of which indemnification may be sought from the Corporation pursuant to this Agreement, and any similarly indemnified persons are also a party to such Proceeding, the Indemnified Party, together with such other persons, will employ counsel to represent jointly the Indemnified Party and such other persons, unless the Indemnified Party is advised by counsel that there is a potential conflict in such joint representation and such joint representation would be precluded under applicable standards of professional conduct then prevailing in the jurisdiction in which such Proceedings are being conducted, in which case the Indemnified Party will notify the Corporation and will be entitled to be represented by separate counsel.

5.4

The Indemnified Party shall not settle, and the Corporation shall not be liable for any settlement of, any Proceeding without the Corporation’s written consent.  The Corporation shall not settle any Proceeding in a manner that would impose any fines, penalties or obligations on the Indemnified Party without the written consent of the Indemnified Party.  Neither the Corporation nor the Indemnified Party shall unreasonably withhold their consent to any proposed settlement.

5.5

The Indemnified Party agrees to give the Corporation such information and co-operation as the Corporation may reasonably require from time to time in respect of all matters hereunder.  The Corporation agrees to give the Indemnified Party such information and co-operation as the Indemnified Party may reasonably require from time to time in respect of all matters hereunder.

5.6

Payment of indemnification in respect of a Proceeding shall be made by the Corporation as soon as practicable but in any event within 60 days after a written claim by the Indemnified Party is received by the Corporation (which claim shall include such documentation and information as is reasonably necessary to determine whether and to what extent the Indemnified Party is entitled to indemnification, including but not limited to copies of invoices received by the Indemnified Party in connection with any Expenses), unless a determination is made by the Corporation that the Indemnified Party is not entitled to indemnification.

6.

Enforcement 

6.1

If a claim under this Agreement for indemnity for Liabilities or for an Advance is refused or is not paid in full by the Corporation within 60 days in the case of indemnity for Liabilities and 30 days in the case of an Advance, after a written claim and all required supporting material has been received by the Corporation, the Indemnified Party may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the Indemnified Party will be entitled to be paid also the expense of prosecuting such claim, including reasonable fees and expenses of counsel.  It shall be a defence to any such action (other than an action brought to enforce a claim for an Advance incurred in connection with any Proceeding in advance of its final disposition) that the Indemnified Party has not met the standards of conduct which make it permissible under applicable law for the Corporation to
indemnify the Indemnified Party for the amount claimed, or is otherwise not entitled to indemnification under this Agreement, but the burden of proving such defence shall be on the Corporation and the Indemnified Party shall be entitled to receive Advances pursuant to Section 3 unless and until such defence may be finally adjudicated by a court order or judgement from which no further appeal exists.  It is the parties' intention that if the Corporation contests the Indemnified Party's right to indemnification, the question of the Indemnified Party's right to indemnification shall be for the court to decide, and no determination by the Corporation (including its Board of Directors, any committee of directors or independent legal counsel) that the Indemnified Party has not met the applicable standard of conduct shall create a presumption that the Indemnified Party has not met the applicable standard of conduct. 

 

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7.

Taxes Payable

7.1

The Corporation agrees to reimburse the Indemnified Party for the net amount of all taxes payable by the Indemnified Party under the taxing laws of any jurisdiction as a result of the payment or reimbursement or Advance under this Agreement, including this clause, constituting a taxable benefit to the Indemnified Party.

8.

Other Rights

8.1

Notwithstanding any other provision of this Agreement, the Corporation hereby agrees to indemnify the Indemnified Party to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the provisions of this Agreement.  In the event of any change after the date of this Agreement in any applicable law or rule (whether by legislative action or judicial decision), which grants or permits any greater right to indemnification and/or advancement of expenses, such changes shall automatically apply to the Indemnified Party's rights, and the Corporation's obligations, under this Agreement.  In the event of any change in applicable law which narrows the right of the Corporation to indemnify or to advance expenses to the Indemnified Party, such changes shall automatically apply to this agreement except to the extent that such law is not required to be applied to this Agreement.

8.2

The indemnification and advances as provided by this Agreement shall not be deemed to derogate from or exclude any other rights to which the Indemnified Party may be entitled under any provision of the Act or otherwise at law, the Articles of the Corporation, the By-Laws, any other agreement of the Corporation, any vote of shareholders of the Corporation, or otherwise.

8.3

The obligations of the Corporation under this Agreement shall cover the Indemnified Party's service as a director or officer of the Corporation or in an Authorized Capacity with a Another Entity and all of his or her acts in any such capacity whether prior to or after the date of this Agreement.

8.4

The obligations of the Corporation under this Agreement (including for greater certainty the obligation with respect to insurance under Section 4.2) shall continue for the longest period permitted under applicable law after the Indemnified Party has ceased to be a director or officer of the Corporation or ceased to serve in an Authorized Capacity with a Another Entity. 

 

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9.

Deceased Indemnified Party

9.1

If the Indemnified Party is deceased and is entitled to indemnification under any provisions of this Agreement, the Corporation agrees to indemnify and hold harmless the Indemnified Party's estate and executors, administrators, legal representatives and lawful heirs to the same extent as it would indemnify the Indemnified Party, if alive, hereunder.

10.

Notices

10.1

Unless otherwise permitted by this Agreement, all notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been fully given if delivered to the party to whom the notice or other communication is directed:

(a)

if to the Indemnified Party, at the last known address as set forth in the records of the Corporation;

(b)

if to the Corporation, at:

Suite 1400, 

505, -3rd Street SW, 

Calgary, Alberta T2P 3E6;

or to such other address as each party may from time to time notify the other of in writing.

10.2

If the Corporation receives notice from any other source of any matter which the Indemnified Party would otherwise be obligated hereunder to give notice of to the Corporation, then the Indemnified Party shall be relieved of the Indemnified Party's obligation hereunder to give notice to the Corporation, provided the Corporation has not suffered any damage from the failure of the Indemnified Party to give notice as herein required.

11.

Severability

11.1

If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever:

(a)

the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, all portions or any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable that are not of themselves in the whole invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and

(b)

to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not of themselves in the whole invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision which is held to be invalid, illegal or unenforceable.

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12.

Governing Law And Consent To Jurisdiction

12.1

The parties hereto agree that this Agreement shall be construed and enforced in accordance with, and governed by, the laws of the Province of Alberta

12.2

The Corporation and the Indemnified Party each hereby irrevocably consent to the exclusive jurisdiction and venue of the courts of the Province of Alberta for all purposes in connection with any action or proceedings which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be commenced, prosecuted and continued only in such courts.  

13.

Counterparts

13.1

This Agreement may be executed in counterparts and delivered via facsimile.  Each such counterpart shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

14.

Modification And Waiver

14.1

No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

15.

Prior Agreements 

15.1

This Agreement shall supersede and replace any and all prior agreements (except any written agreement of employment between the Corporation and the Indemnified Party, which shall remain in full force and effect except to the extent augmented or amended herein) between the parties hereto respecting the matters set forth herein.

16.

Successors And Assigns

16.1

This Agreement shall be binding upon and enure to the benefit of the Corporation and its successors and assigns, including any Corporation with which the Corporation is merged or amalgamated, and to the Indemnified Party and the Indemnified Party's executors, administrators, legal representatives, lawful heirs, successors and assigns.

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above written.

NXT ENERGY SOLUTIONS INC.

Per:  ______________________________

______________________________

[Title of Officer or Director]

Per:  ______________________________ex4_1.htm

Exhibit 4.1

 

COMMON STOCK PURCHASE WARRANT

REXAHN PHARMACEUTICALS, INC.

 

 

	
Warrant Shares: _______

	
Initial Exercise Date: _______, 2010

 

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 ______ ___, 2010 (the “Initial Exercise Date”) and on or prior to the close of business on the four (4) anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Rexahn 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 June __, 2010, 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 available and 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 Form within two (2) Business Days 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 $1.90, subject to adjustment hereunder (the “Exercise Price”).

 

c)            Cashless Exercise.  If at the time of exercise hereof there is no effective registration statement registering the Warrant Shares, 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 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 OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board 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 (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 Company and reasonably acceptable to the Holder, the fees and expenses of which shall be paid by the Company.

 

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 (x) the delivery to the Company of the Notice of Exercise, (y) surrender of this Warrant (if required) and (z) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted) (such date, the “Warrant Share Delivery Date”).  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.

 

  

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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 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.

 

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 otherwise purchases shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder reasonably anticipated receiving upon such exercise pursuant to the terms hereof (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 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.

 

  

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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 in the Notice of Exercise; 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 attached hereto duly executed by the Holder and the Company shall have the right to require, as a condition thereto, the prior or contemporaneous 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.

 

  

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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 not in compliance 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, 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 not in compliance with the Beneficial Ownership Limitation..  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 request of the Holder, the Company shall within two (2) Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding as determined pursuant to clauses (A), (B) or (C), as applicable, in the preceding sentence.  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 4.9% 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.

 

  

5

  

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 security exchangeable or convertible into shares of Common Stock 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 without payment therefor), (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.

 

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 Holders) 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.

 

  

6

  

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 Holders) 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 such 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.

 

  

7

  

 

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, (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 that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange, including, but not limited to, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, 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.  “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 greater of 100% and 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 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, the Company (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and the Successor Entity 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.

 

  

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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. If the Company enters into a Variable Rate Transaction, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised.

 

  

9

  

ii.       Notice to Allow Exercise by Holder. If during the term in which this Warrant may be exercised by the Holder (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, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.  The 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 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.

 

  

11

  

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 include reference to 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.

 

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.

 

  

12

  

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 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.

 

  

13

  

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 the 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 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 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 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 stockholder 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.

 

  

14

  

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 Pages Follow)

  

15

  

 

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.

 

	  	
REXAHN PHARMACEUTICALS, INC.

	  	  	  
	  	  	  
	  	
By:  

	  
	  	  	
Name:

	  	  	
Title:

  

16

  

NOTICE OF EXERCISE

TO:          REXAHN 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.

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