EXHIBIT 4.5
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED EXCEPT UPON DELIVERY TO THE
CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO IT
THAT SUCH TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED
THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.
Avitar, Inc.
Warrant for the Purchase of Shares of Common Stock,
par value $0.01 per Share
No. W-G3 4,629,630 Shares
Issuance Date: March 8, 2004
THIS CERTIFIES that, for value received, Gryphon Master Fund, L.P., whose
address is 500 Crescent Court, Suite 270, Dallas, Texas 75201 (the "Holder"), is
entitled to subscribe for and purchase from Avitar, Inc., a Delaware corporation
(the "Company"), upon the terms and conditions set forth herein, Four Million
Six Hundred Twenty Nine Six Hundred Thirty (4,629,630) shares of the Company's
Common Stock, par value $0.01 per share ("Common Stock"), at a price of $0.135
per share (the "Exercise Price"). As used herein the term "this Warrant" shall
mean and include this Warrant and any Common Stock or Warrants hereafter issued
as a consequence of the exercise or transfer of this Warrant in whole or in
part.
The number of shares of Common Stock issuable upon exercise of the Warrants
(the "Warrant Shares") may be adjusted from time to time as hereinafter set
forth. The Warrant Shares are entitled to the benefits, and subject to the
obligations, set forth in the Registration Rights Agreement between the Company
and the Holder dated concurrently herewith.
1. Exercise Period. This Warrant may be exercised at any time or from time to
time during the period commencing on the Issuance Date and ending at 5:00 P.M.
Eastern time on the fifth anniversary of the Issuance Date (the "Exercise
Period").
2. Procedure for Exercise; Effect of Exercise.
(a) Cash Exercise. This Warrant may be exercised, in whole or in part, by
the Holder during normal business hours on any business day during the Exercise
Period by (i) the presentation and surrender of this Warrant to the Company at
its principal office along with a duly executed Notice of Exercise (in the form
attached to this Agreement) specifying the number of Warrant Shares to be
purchased, and (ii) delivery of payment to the Company of the Exercise Price for
the number of Warrant Shares specified in the Notice of Exercise by cash, wire
transfer of immediately available funds to a bank account specified by the
Company, or by certified or bank cashier's check.
(b) Cashless Exercise. This Warrant may also be exercised by the Holder
through a cashless exercise, as described in this Section 2(b). This Warrant may
be exercised, in whole or in part, by the Holder during normal business hours on
any business day during the Exercise Period by the presentation and surrender of
this Warrant to the Company at its principal office along with a duly executed
Notice of Exercise specifying the number of Warrant Shares to be applied to such
exercise. The number of Warrant Shares to be delivered upon exercise of this
Warrant pursuant to this Section 2(b) shall equal the value of this Warrant (or
the portion thereof being canceled) computed as of the date of delivery of this
Warrant to the Company using the following formula:
X = Y(A-B)
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A
Where:
X = the number of shares of Common Stock to be issued to Holder under this
Section 2(b);
Y = the number of Warrant Shares identified in the Notice of Exercise as
being applied to the subject exercise;
A = the Current Market Price on such date; and
B = the Exercise Price on such date
For purposes of this Section 2(b), the "Current Market Price" per share of
Common Stock on any date shall be deemed to be the volume weighted average price
of a single share of Common Stock for the ten (10) consecutive trading days
immediately preceding the date in question as reported on the American Stock
Exchange. If on any such dates the Common Stock is not listed or admitted to
trading on the American Stock Exchange or any other national securities exchange
and is not quoted by NASDAQ or any similar organization, the fair value of a
share of Common Stock on such date, as determined in good faith by the board of
directors of the Company, whose determination shall be conclusive absent
manifest error, shall be used.
The Company acknowledges and agrees that this Warrant was issued on the
Issuance Date. Consequently, the Company acknowledges and agrees that, if the
Holder conducts a cashless exercise pursuant to this Section 2(b), the period
during which the Holder held this Warrant may, for purposes of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
be "tacked" to the period during which the Holder holds the Warrant Shares
received upon such cashless exercise.
(c) Effect of Exercise. Upon receipt by the Company of this Warrant and a
Notice of Exercise, together with proper payment of the Exercise Price, as
provided in this Section 2, the Company agrees that such Warrant Shares shall be
deemed to be issued to the Holder as the record holder of such Warrant Shares as
of the close of business on the date on which this Warrant has been surrendered
and payment has been made for such Warrant Shares in accordance with this
Agreement and the Holder shall be deemed to be the holder of record of the
Warrant Shares, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such Warrant Shares shall
not then be actually delivered to the Holder. A stock certificate or
certificates for the Warrant Shares specified in the Notice of Exercise shall be
delivered to the Holder as promptly as practicable, and in any event within
seven (7) business days, thereafter. The stock certificate(s) so delivered shall
be in any such denominations as may be reasonably specified by the Holder in the
Notice of Exercise. If this Warrant should be exercised in part only, the
Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the right of the Holder to purchase the balance
of the Warrant Shares subject to purchase hereunder.
3. Registration of Warrants; Transfer of Warrants. Any Warrants issued upon the
transfer or exercise in part of this Warrant shall be numbered and shall be
registered in a Warrant Register as they are issued. The Company shall be
entitled to treat the registered holder of any Warrant on the Warrant Register
as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on the
part of any other person, and shall not be liable for any registration or
transfer of Warrants which are registered or to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration or transfer, or with the knowledge of such facts that its
participation therein amounts to bad faith. This Warrant shall be transferable
only on the books of the Company upon delivery thereof duly endorsed by the
Holder or by its duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment, or authority to transfer. In all
cases of transfer by an attorney, executor, administrator, guardian, or other
legal representative, duly authenticated evidence of his or its authority shall
be produced. Upon any registration of transfer, the Company shall deliver a new
Warrant or Warrants to the person entitled thereto. This Warrant may be
exchanged, at the option of the Holder thereof, for another Warrant, or other
Warrants of different denominations, of like tenor and representing in the
aggregate the right to purchase a like number of Warrant Shares, upon surrender
to the Company or its duly authorized agent.
4. Restrictions on Transfer. (a) The Holder, as of the date of issuance hereof,
represents to the Company that such Holder is acquiring the Warrants for its own
account for investment purposes and not with a view to the distribution thereof
or of the Warrant Shares. Notwithstanding any provisions contained in this
Warrant to the contrary, this Warrant and the related Warrant Shares shall not
be transferable except pursuant to the proviso contained in the following
sentence or upon the conditions specified in this Section 4, which conditions
are intended, among other things, to insure compliance with the provisions of
the Securities Act and applicable state law in respect of the transfer of this
Warrant or such Warrant Shares. The Holder by acceptance of this Warrant agrees
that the Holder will not transfer this Warrant or the related Warrant Shares
prior to delivery to the Company of an opinion of the Holder's counsel (as such
opinion and such counsel are described in Section 4(b) hereof) or until
registration of such Warrant Shares under the Securities Act has become
effective or after a sale of such Warrant or Warrant Shares has been consummated
pursuant to Rule 144 or Rule 144A under the Securities Act; provided, however,
that the Holder may freely transfer this Warrant or such Warrant Shares (without
delivery to the Company of an opinion of Counsel) (i) to one of its nominees,
affiliates or a nominee thereof, (ii) to a pension or profit-sharing fund
established and maintained for its employees or for the employees of any
affiliate, (iii) from a nominee to any of the aforementioned persons as
beneficial owner of this Warrant or such Warrant Shares, or (iv) to a qualified
institutional buyer, so long as such transfer is effected in compliance with
Rule 144A under the Securities Act.
(b) The Holder, by its acceptance hereof, agrees that prior to any transfer
of this Warrant or of the related Warrant Shares (other than as permitted by
Section 4(a) hereof or pursuant to a registration under the Securities Act), the
Holder will give written notice to the Company of its intention to effect such
transfer, together with an opinion of such counsel for the Holder as shall be
reasonably acceptable to the Company, to the effect that the proposed transfer
of this Warrant and/or such Warrant Shares may be effected without registration
under the Securities Act. Upon delivery of such notice and opinion to the
Company, the Holder shall be entitled to transfer this Warrant and/or such
Warrant Shares in accordance with the intended method of disposition specified
in the notice to the Company.
(c) Each stock certificate representing Warrant Shares issued upon exercise
or exchange of this Warrant shall bear the following legend unless the opinion
of counsel referred to in Section 4(b) states such legend is not required:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED EXCEPT UPON
DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY IN
FORM AND SUBSTANCE TO IT THAT SUCH TRANSFER WILL NOT VIOLATE THE
SECURITIES ACT OF 1933, AS AMENDED."
The Holder understands that the Company may place, and may instruct any transfer
agent or depository for the Warrant Shares to place, a stop transfer notation in
the securities records in respect of the Warrant Shares.
5. Reservation of Shares. The Company shall at all times during the Exercise
Period reserve and keep available out of its authorized and unissued Common
Stock, solely for the purpose of providing for the exercise of the rights to
purchase all Warrant Shares granted pursuant to the Warrants, such number of
shares of Common Stock as shall, from time to time, be sufficient therefor. The
Company covenants that all shares of Common Stock issuable upon exercise of this
Warrant, upon receipt by the Company of the full Exercise Price therefor, and
all shares of Common Stock issuable upon conversion of this Warrant, shall be
validly issued, fully paid, non-assessable, and free of preemptive rights.
6. Adjustments. The number of shares of Common Stock issuable upon exercise of
the Warrants shall be adjusted from time to time as follows:
(a) (i) In the event that the Company shall (A) pay a dividend or make a
distribution, in shares of Common Stock, on any class of capital stock of the
Company or any subsidiary which is not directly or indirectly wholly owned by
the Company, (B) split or subdivide its outstanding Common Stock into a greater
number of shares, or (C) combine its outstanding Common Stock into a smaller
number of shares, then in each such case the number of shares issuable upon
exercise of this Warrant shall be adjusted so that the Holder of a Warrant
thereafter surrendered for exercise shall be entitled to receive the number of
shares of Common Stock that such Holder would have owned or have been entitled
to receive after the occurrence of any of the events described above had such
Warrant been exercised immediately prior to the occurrence of such event. An
adjustment made pursuant to this Section 6(a)(i) shall become effective
immediately after the close of business on the record date in the case of a
dividend or distribution (except as provided in Section 6(e) below) and shall
become effective immediately after the close of business on the effective date
in the case of such subdivision, split or combination, as the case may be.
(ii) In the event that, at any time as a result of an adjustment made
pursuant to Section 6(a)(i) above, the Holder of any Warrant thereafter
surrendered for exercise shall become entitled to receive any shares of the
Company other than shares of the Common Stock, thereafter the number of such
other shares so receivable upon exercise of any such Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
Section 6(a)(i) above.
(b) In case of any reclassification of the Common Stock (other than in a
transaction to which Section 6(a)(i) applies), any consolidation of the Company
with, or merger of the Company into, any other entity, any merger of another
entity into the Company (other than a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), any sale or transfer of all or substantially all
of the assets of the Company or any compulsory share exchange, pursuant to which
share exchange the Common Stock is converted into other securities, cash or
other property, then lawful provision shall be made as part of the terms of such
transaction whereby the Holder of a Warrant then outstanding shall have the
right thereafter, during the period such Warrant shall be exercisable, to
exercise such Warrant only for the kind and amount of securities, cash and other
property receivable upon the reclassification, consolidation, merger, sale,
transfer or share exchange by a holder of the number of shares of Common Stock
of the Company into which a Warrant might have been able to exercise for
immediately prior to the reclassification, consolidation, merger, sale, transfer
or share exchange assuming that such holder of Common Stock failed to exercise
rights of election, if any, as to the kind or amount of securities, cash or
other property receivable upon consummation of such transaction subject to
adjustment as provided in Section 6(a) above following the date of consummation
of such transaction. The provisions of this Section 6(b) shall similarly apply
to successive reclassifications, consolidations, mergers, sales, transfers or
share exchanges.
(c) If:
(i) the Company shall take any action which would require an adjustment
pursuant to Section 6(a); or
(ii) the Company shall authorize the granting to the holders of its Common
Stock generally of rights, warrants or options to subscribe for or purchase any
shares of any class or any other rights, warrants or options; or
(iii) there shall be any reclassification or change of the Common Stock
(other than a subdivision or combination of its outstanding Common Stock or a
change in par value) or any consolidation, merger or statutory share exchange to
which the Company is a party and for which approval of any stockholders of the
Company is required, or the sale or transfer of all or substantially all of the
assets of the Company; or
(iv) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then, the Company shall cause to be filed with the transfer agent for the
Warrants and shall cause to be mailed to each Holder at such Holder's address as
shown on the books of the transfer agent for the Warrants, as promptly as
possible, but at least 30 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or granting of rights, warrants or
options, or, if a record is not to be taken, the date as of which the holders of
Common Stock of record to be entitled to such dividend, distribution or rights,
warrants or options are to be determined, or (B) the date on which such
reclassification, change, consolidation, merger, statutory share exchange, sale,
transfer, dissolution, liquidation or winding-up is expected to become effective
or occur, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification, change,
consolidation, merger, statutory share exchange, sale, transfer, dissolution,
liquidation or winding up. Failure to give such notice or any defect therein
shall not affect the legality or validity of the proceedings described in this
Section 6(c).
(d) Whenever an adjustment is made as herein provided, the Company shall
promptly file with the transfer agent for the Warrants a certificate of an
officer of the Company setting forth the adjustment and setting forth a brief
statement of the facts requiring such adjustment and a computation thereof. The
Company shall promptly cause a notice of such adjustment to be mailed to each
Holder.
(e) In any case in which Section 6(a) provides that an adjustment shall
become effective immediately after a record date for an event and the date fixed
for such adjustment pursuant to Section 6(a) occurs after such record date but
before the occurrence of such event, the Company may defer until the actual
occurrence of such event (i) issuing to the Holder of any Warrants exercised
after such record date and before the occurrence of such event the additional
shares of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock issuable upon such
exercise before giving effect to such adjustment, and (ii) paying to such holder
any amount in cash in lieu of any fraction pursuant to Section 6(f).
(f) The Company shall not be required to issue fractions of shares of
Common Stock or other capital stock of the Company upon the exercise of this
Warrant. If any fraction of a share would be issuable on the exercise of this
Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the Current Market
Price of such share of Common Stock on the date of exercise of this Warrant.
7. Transfer Taxes. The issuance of any shares or other securities upon the
exercise of this Warrant, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge in respect of such issuance. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of any certificate in a name
other than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
8. Loss or Mutilation of Warrant. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction, or mutilation of any Warrant (and upon
surrender of any Warrant if mutilated), and upon reimbursement of the Company's
reasonable incidental expenses, the Company shall execute and deliver to the
Holder thereof a new Warrant of like date, tenor, and denomination.
9. No Rights as a Stockholder. The Holder of any Warrant shall not have, solely
on account of such status, any rights of a stockholder of the Company, either at
law or in equity, or to any notice of meetings of stockholders or of any other
proceedings of the Company, except as provided in this Warrant.
10. Governing Law. This Warrant shall be construed in accordance with the laws
of the State of Delaware applicable to contracts made and performed within such
State, without regard to principles of conflicts of law.
11. Beneficial Ownership. The Company shall not effect the exercise of this
Warrant, and no person who is a holder of this Warrant shall have the right to
exercise this Warrant, to the extent that after giving effect to such exercise,
such person (together with such person's affiliates) would beneficially own in
excess of 9.99% of the shares of the Common Stock outstanding immediately after
giving effect to such exercise. For purposes of the foregoing sentence, the
aggregate number of shares of Common Stock beneficially owned by such person and
its affiliates shall include, without limitation, the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude shares of Common
Stock which would be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by such person and its affiliates,
and (ii) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company beneficially owned by such person and its
affiliates (including, without limitation, any debentures, convertible notes or
convertible preferred stock or warrants) subject to a limitation on conversion
or exercise analogous to the limitation contained herein. Except as set forth in
the preceding sentence, for purposes of this paragraph, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended. For purposes of this Warrant, 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 (1) the Company's most recent
Form 10-Q, Form 10-K or other public filing with the Securities Exchange
Commission, as the case may be, (2) a more recent public announcement by the
Company, or (3) any other notice by the Company or its transfer agent setting
forth the number of shares of Common Stock outstanding. For any reason at any
time, upon the written or oral request of the Holder of this Warrant, the
Company shall within two business days confirm orally and in writing to the
Holder of this Warrant 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
by the Holder of this Warrant and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. In effecting the
exercise of this Warrant, the Company shall be entitled to rely on a
representation by the Holder of this Warrant as to the number of shares that it
beneficially owns for purposes of the above 9.99% limitation calculation.
* * *
Dated: March 8, 2004
AVITAR, INC.
By:
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Peter P. Phildius, Chief Executive Officer
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, hereby sells, assigns, and transfers unto
__________________ a Warrant to purchase __________ shares of Common Stock, par
value $0.01 per share, of Avitar, Inc. (the "Company"), together with all right,
title, and interest therein, and does hereby irrevocably constitute and appoint
attorney to transfer such Warrant on the books of the Company, with full power
of substitution.
Dated:
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By:
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Signature
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
To: Avitar, Inc.
65 Dan Road
Canton, Massachusetts 02021
Attention: Chief Financial Officer
NOTICE OF EXERCISE
The undersigned hereby exercises his or its rights to purchase _______ Warrant
Shares covered by the within Warrant and tenders payment herewith in the amount
of $_________ by [tendering cash or delivering a certified check or bank
cashier's check, payable to the order of the Company] [surrendering ______
shares of Common Stock received upon exercise of the attached Warrant, which
shares have a Current Market Price equal to such payment] in accordance with the
terms thereof, and requests that certificates for such securities be issued in
the name of, and delivered to:
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(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated:
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By:
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Print Name
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Signature
Address:
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