1
Exhibit 10.8
------------
================================================================================
WARRANT
To Purchase Shares of Common Stock,
-----
$0.01 par value, of
CARDIOTECH INTERNATIONAL, INC.
1996
----------- ---,
================================================================================
2
TABLE OF CONTENTS
Page
1. Definitions.................................................. 2
1.1. Definitions of Capitalized Terms....................... 2
1.2. Other Definitions...................................... 5
2. Exercise of Warrant.......................................... 5
2.1. Right to Exercise; Notice.............................. 5
2.2. Manner of Exercise; Issuance of Common Stock........... 5
2.3. Effectiveness of Exercise.............................. 6
2.4. Fractional Shares...................................... 6
2.5. Continued Validity..................................... 7
3. Registration, Transfer and Exchange; Legends................. 7
3.1. Maintenance of Registration Books...................... 7
3.2. Transfer and Exchange.................................. 7
3.3. Replacement............................................ 8
3.4. Ownership.............................................. 8
4. Anti-Dilution Provisions..................................... 8
4.1. Adjustment of Number of Shares Purchasable............. 8
4.2. Adjustment of Exercise Price........................... 9
4.3. Rights Offering........................................ 17
4.4. Certificates and Notices............................... 17
4.5. Adjustments for Changes in Certain Data................ 19
5. Reservation of Common Stock.................................. 19
6. Registration, Etc............................................ 19
6.1. Certain Definitions.................................... 19
6.2. Registration on Request................................ 20
6.3. Incidental Registration................................ 21
6.4. Permitted Registration................................. 22
6.5. Registration Procedures................................ 22
6.6. Indemnification........................................ 23
6.7. Restrictions on Other Agreements....................... 24
7. Various Covenants of the Company............................. 24
7.1. No Impairment or Amendment............................. 24
7.2. Availability of Information............................ 25
7.3. Anti-Dilution Provisions............................... 25
(i)
3
7.4. Indemnification........................................ 26
7.5. Certain Expenses....................................... 26
7.6. Listing on Securities Exchanges, etc................... 26
8. Miscellaneous................................................ 26
8.1. Nonwaiver.............................................. 26
8.2. Amendment.............................................. 26
8.3. Communications......................................... 26
8.4. Like Tenor............................................. 28
8.5. Remedies............................................... 28
8.6. Successors and Assigns................................. 28
8.7. Modification and Severability.......................... 28
8.8. Integration............................................ 28
8.9. Headings............................................... 28
8.10. Governing Law; Jurisdiction; Waiver of
Jury Trial........................................... 28
Form of Notice of Exercise
Form of Assignment
(ii)
4
WARRANT
To Purchase ______ Shares of Common Stock, $0.01 par value, of
CARDIOTECH INTERNATIONAL, INC.
Private Placement No.: ___________
No. RW __ _______ ___ , 1996
THIS IS TO CERTIFY that, for value received, ____________________________,
or registered assigns, is entitled upon the due exercise hereof at any time
during the Exercise Period (as hereinafter defined) to purchase ______ shares
of Common Stock of CardioTech International, Inc., a Massachusetts corporation
(the "Company"), at an Exercise Price of $ _____ per share (such Exercise Price
and the number of shares of Common Stock purchasable hereunder being subject
to adjustment as provided herein), and to exercise the other rights, powers
and privileges hereinafter provided, all on the terms and subject to the
conditions hereinafter set forth.
This Warrant is one of the Company's Warrants to Purchase Shares of Common
Stock (herein, together with any warrants issued in exchange therefor or
replacement thereof, all as amended or supplemented from time to time, called
the "Warrants") exercisable for ______ (subject to adjustment) shares of Common
Stock of the Company issued pursuant to a certain Letter Agreement, dated May
__, 1996, by and among the Company, PolyMedica Industries, Inc., a Massachusetts
corporation, and the institutional investor named therein (as amended from time
to time, the "Letter Agreement"). Reference is hereby made to the Letter
Agreement for a description of, among other things, certain terms relating to
the Warrants and the shares issuable upon exercise thereof and certain rights of
the holders thereof. The holder of this Warrant is entitled to the benefits of
the Letter Agreement and may enforce the agreements of the Company contained
therein, all in accordance with and subject to the terms thereof,
notwithstanding any payment or prepayment or redemption or acquisition by the
Company of any other securities issued pursuant to the Letter Agreement.
5
1. DEFINITIONS.
1.1. DEFINITIONS OF CAPITALIZED TERMS. The terms defined in this
section 1, whenever used and capitalized in this Warrant, shall, unless the
context otherwise requires, have the following respective meanings:
"ASSIGNMENT" shall mean the form of Assignment appearing at the end of this
Warrant.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or other
day which shall be in Boston, Massachusetts or New York, New York a legal
holiday or a day on which banking institutions therein are authorized by law to
close.
"CLOSING DATE" shall mean May ____, 1996.
"COMMISSION" shall mean the Securities and Exchange Commission or any other
federal agency from time to time administering the Securities Act and/or the
Exchange Act.
"COMMON STOCK" shall mean the Common Stock, $0.01 par value, of the Company
as constituted on the Closing Date and any stock into which such Common Stock
shall have been changed or any stock resulting from any reclassification of such
Common Stock.
"COMPANY" shall mean CardioTech International, Inc., a Massachusetts
corporation, and any successor corporation.
"CONVERTIBLE SECURITIES" shall mean evidences of indebtedness, shares
(including, without limitation, Preferred Shares) of stock or other securities
which are convertible into or exchangeable for, with or without payment of
additional consideration, shares of Common Stock, either immediately or upon the
arrival of a specified date or the happening of a specified event.
"CURRENT MARKET PRICE" of any security as of any date herein specified
shall be (a) if such security is listed or admitted for trading on any national
securities exchange, the last sale price of such security, regular way, or the
average of the closing bid and asked prices thereof if no such sale occurred, in
each case as officially reported on the principal securities exchange on which
such security is listed, or (b) if not reported as described in clause (a), the
average of the closing bid and asked prices of such security in the
over-the-counter market as shown by the National Association of Securities
Dealers, Inc. Automated Quotation System, or any similar system of automated
dissemination of quotations of securities prices then in common use, if so
quoted, as reported by any member firm of the New York Stock Exchange selected
by the Company, or (c) if not quoted as
-2-
6
described in clause (b), the average of the closing bid and asked prices for
such security as reported by the National Quotation Bureau Incorporated or any
similar successor organization, as reported by any member firm of the New York
Stock Exchange selected by the Company. If such security is quoted on a national
securities or central market system in lieu of a market or quotation system
described above, the closing price shall be determined in the manner set forth
in clause (a) of the preceding sentence if actual transactions are reported and
in the manner set forth in clause (b) of the preceding sentence if bid and asked
prices are reported but actual transactions are not.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
"EXERCISE PERIOD" shall mean the period commencing on the date hereof and
terminating at the close of business on January 31, 2000.
"EXERCISE PRICE" shall mean the price per share of Common Stock set forth
in the preamble to this Warrant, as such price may be adjusted pursuant to
section 4.
"FAIR VALUE" shall mean the fair value of the appropriate security,
property, assets, business or entity as determined by an independent investment
banking firm of recognized national standing selected by the Company and
satisfactory to the holder or holders of a majority in interest of the Warrants
and Warrant Shares at the time outstanding, PROVIDED that the fair value of the
security, property, assets, business or entity, as the case may be, in question
shall be determined without, in the case of any such securities, applying a
discount for any lack of liquidity thereof, but otherwise in each case in
accordance with generally accepted financial practice. Such determination shall
be set forth in writing, and the Company shall, immediately following such
determination, mail a copy thereof to each holder or holders of Warrants and
Warrant Shares then outstanding. The determination so made shall be conclusive
and binding on the Company and such holder or holders. The Company shall pay all
of the expenses incurred in connection with any such determination, including,
without limitation, the expenses of the independent investment banking firm
engaged to make such determination. If the Company shall not have selected such
investment banking firm within 10 days after the occurrence of the event giving
rise to the need therefor, then the holder or holders of a majority in interest
of the Warrants and Warrant Shares at the time outstanding may select such
investment banking firm.
-3-
7
"LETTER AGREEMENT" shall have the meaning specified in the preamble to this
Warrant.
"NOTICE OF EXERCISE" shall mean the form of Notice of Exercise appearing at
the end of this Warrant.
"OFFICERS' CERTIFICATE" shall mean a certificate signed on behalf of the
Company by its President or one of its Vice Presidents and its Chief Financial
Officer or its Treasurer.
"OTHER SECURITIES" shall mean with reference to the exercise privilege of
the holders of the Warrants, any shares (other than Common Stock) and any other
securities of the Company (including, without limitation, Preferred Shares) or
of any other Person which the holders of the Warrants at any time shall be
entitled to receive, or shall have received, upon the exercise or partial
exercise of the Warrants, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock (or Other Securities) pursuant to the terms of the
Warrants or otherwise.
"PERSON" shall mean an individual, a corporation (including, without
limitation, an association, a joint-stock company, a business trust or another
similar organization), a partnership, a joint venture, a trust, an
unincorporated organization or a government or any agency or political
subdivision thereof.
"PREFERRED SHARES", as applied to shares of any Person, shall mean shares
of such Person which shall be entitled to preference or priority over any other
shares of such Person in respect of either the payment of dividends or the
distribution of assets upon liquidation.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"STOCK PURCHASE RIGHTS" shall mean any warrants, options or other rights to
subscribe for, purchase or otherwise acquire any shares of Common Stock or any
Convertible Securities, either immediately or upon the arrival of a specified
date or the happening of a specified event.
"WARRANT REGISTER" shall have the meaning specified in section 3.1.
"WARRANT SHARES" shall mean the shares of Common Stock (and/or Other
Securities) issued or issuable, as the case may be, from time to time upon
exercise of the Warrants, including,
-4-
8
without limitation, any shares of Common Stock (and/or Other Securities) issued
or issuable with respect thereto by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation, other reorganization or otherwise.
"WARRANTS" shall have the meaning specified in the preamble to this
Warrant.
1.2. OTHER DEFINITIONS. The terms defined in this section 1.2, whenever
used in this Warrant, shall, unless the context otherwise requires, have the
following respective meanings:
"CORPORATION" shall include an association, joint stock company, business
trust or other similar organization.
"SHARES" of any Person shall include any and all shares of capital stock of
such Person of any class or other shares, interests, participations or other
equivalents (however designated) in the capital of such Person.
"THIS WARRANT" shall mean, and the words "HEREIN", "HEREOF", "HEREUNDER"
and words of similar import shall refer to, this instrument as it may from time
to time be amended or supplemented.
2. Exercise of Warrant.
-------------------
2.1. RIGHT TO EXERCISE; NOTICE. On the terms and subject to the
conditions of this section 2, the holder hereof shall have the right, at its
option, to exercise this Warrant in whole or in part at any time or from time to
time during the Exercise Period, all as more fully specified below, PROVIDED
that a partial exercise of this Warrant for less than the entire remaining
amount of Warrant Shares issuable under this Warrant shall be made only for a
whole number of shares.
2.2. MANNER OF EXERCISE; ISSUANCE OF COMMON STOCK. To exercise this
Warrant, the holder hereof shall deliver to the Company (A) a Notice of Exercise
duly executed by the holder hereof specifying the number of Warrant Shares to be
purchased, (B) an amount equal to the aggregate Exercise Price for all Warrant
Shares as to which this Warrant is then being exercised and (C) this Warrant. At
the option of the holder hereof, payment of the Exercise Price shall be made (W)
by wire transfer of funds to an account in a bank located in the United States
designated by the Company for such purpose, (X) by certified or official bank
check payable to the order of the Company and drawn on a member of the Boston or
New York Clearing House, (Y) by
-5-
9
surrender to the Company of any Warrant Shares, as provided below, or (Z) by any
combination of such methods.
Upon the exercise of this Warrant in whole or in part, the holder
hereof may, at its option, submit to the Company written instructions from such
holder to apply any specified portion of the Warrant Shares issuable upon such
exercise against the cash payment required upon such exercise, in which case the
Company will accept such specified portion of the Warrant Shares (at a value per
Warrant Share equal to the Current Market Price of such share, if applicable, or
the then Fair Value of such share, LESS, in each case, the Exercise Price then
in effect), in lieu of a like amount of such cash payment.
Upon receipt of the items referred to in section 2.3, the Company shall, as
promptly as practicable, and in any event within five Business Days thereafter,
cause to be issued and delivered to the holder hereof (or its nominee) or the
transferee designated in the Notice of Exercise, a certificate or certificates
representing the number of Warrant Shares specified in the Notice of Exercise
(but not exceeding the maximum number of shares issuable upon exercise of this
Warrant). Such certificates shall be registered in the name of the holder hereof
(or its nominee) or in the name of such transferee, as the case may be.
If this Warrant is exercised in part, the Company shall, at the time of
delivery of such certificate or certificates, unless the Exercise Period expired
prior to such exercise, issue and deliver to the holder hereof or the transferee
so designated in the Notice of Exercise, a new Warrant evidencing the right of
the holder hereof or such transferee to purchase at the Exercise Price then in
effect the aggregate number of Warrant Shares for which this Warrant shall not
have been exercised, and this Warrant shall be cancelled.
2.3. EFFECTIVENESS OF EXERCISE. Unless otherwise requested by the holder
hereof, this Warrant shall be deemed to have been exercised and such certificate
or certificates representing Warrant Shares shall be deemed to have been issued,
and the holder or transferee so designated in the Notice of Exercise shall be
deemed to have become the holder of record of such Warrant Shares for all
purposes, as of the close of business on the date on which the Notice of
Exercise, the Exercise Price and this Warrant shall have been received by the
Company.
2.4. FRACTIONAL SHARES. The Company shall not issue fractional Warrant
Shares or scrip representing fractional Warrant Shares upon any exercise of this
Warrant. As to any fractional Warrant Shares which the holder hereof would
otherwise be entitled to purchase from the Company upon such exercise, the
-6-
10
Company shall issue one share which the holder hereof shall be entitled to
purchase from the Company at a price equal to the Exercise Price calculated as
of the date of the Notice of Exercise. Payment of such amount shall be made in
any manner permitted under section 2.2 at the time of delivery of any
certificate or certificates deliverable upon such exercise.
2.5. CONTINUED VALIDITY. A holder of Warrant Shares issued upon the
exercise of this Warrant, in whole or in part, shall continue to be entitled to
all rights to which the holder of this Warrant is entitled pursuant to the
provisions of this Warrant, including, without limitation, the registration
rights arising under section 6 of this Warrant, except such rights as by their
terms apply solely to the holder of a Warrant. The Company will, at the time of
any exercise of this Warrant, upon the request of the holder of the Warrant
Shares issued upon the exercise hereof, acknowledge in writing, in form
reasonably satisfactory to such holder, its continuing obligation to afford to
such holder all rights to which such holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant; PROVIDED that
if such holder shall fail to make any such request, such failure shall not
affect the continuing obligation of the Company to afford to such holder all
such rights.
3. REGISTRATION, TRANSFER AND EXCHANGE; LEGENDS.
3.1. MAINTENANCE OF REGISTRATION BOOKS. The Company shall keep at its
principal executive office (which is now located at 11 State Street, Woburn,
Massachusetts 01801), or such other address (including that of the Company's
transfer agent) as the Company shall notify the holder hereof in writing, a
register (the "Warrant Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration,
transfer and exchange of the Warrants and the Warrant Shares. The Company shall
not at any time close the Warrant Register so as to result in preventing or
delaying the exercise or transfer of this Warrant.
3.2. TRANSFER AND EXCHANGE. Upon surrender for registration of transfer of
this Warrant at such office, the Company shall execute and deliver in the name
of the designated transferee or transferees one or more new Warrants
representing the right to purchase at the Exercise Price then in effect a like
aggregate number of Warrant Shares. At the option of the holder hereof, this
Warrant may be exchanged for other Warrants representing the right to purchase a
like aggregate number of Warrant Shares upon surrender of this Warrant at such
office. Whenever this Warrant is so surrendered for exchange, the Company shall
execute and deliver the Warrants which the holder making the exchange is
entitled to receive. Every Warrant presented or
-7-
11
surrendered for registration of transfer or exchange shall be accompanied by an
Assignment duly executed by the holder thereof or its attorney duly authorized
in writing. All Warrants issued upon any registration of transfer or exchange of
other Warrants shall be the valid obligations of the Company, evidencing the
same rights, and entitled to the same benefits, as the Warrants surrendered upon
such registration of transfer or exchange.
3.3. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and (a) in
the case of any such loss, theft or destruction upon delivery of indemnity
reasonably satisfactory to the Company in form and amount or (b) in the case of
any such mutilation, upon surrender of this Warrant for cancellation at the
office of the Company at which the Warrant Register is kept, the Company, at its
expense, will execute and deliver, in lieu thereof, a new Warrant representing
the right to purchase at the Exercise Price then in effect a like aggregate
number of Warrant Shares. The signed statement of any institutional holder of
this Warrant, in form reasonably satisfactory to the Company, certifying as to
the occurrence of any loss, theft, destruction or mutilation of this Warrant
shall constitute evidence satisfactory to the Company for the purpose of this
section 3.3 and no indemnity shall be required as a condition to the execution
and delivery by the Company of a new Warrant in lieu of this Warrant other than
such institutional holder's unsecured written agreement to indemnify the
Company.
3.4. OWNERSHIP. The Company and any agent of the Company may treat the
Person in whose name this Warrant is registered on the Warrant Register as the
owner and holder hereof for all purposes, notwithstanding any notice to the
contrary, except that, if and when this Warrant is properly assigned in blank,
the Company may (but shall not be obligated to) treat the bearer hereof as the
owner of this Warrant for all purposes, notwithstanding any notice to the
contrary. This Warrant, if properly assigned, may be exercised by a new holder
without first having a new Warrant issued.
4. ANTI-DILUTION PROVISIONS.
4.1. ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE. Upon any adjustment of
the Exercise Price as provided in section 4.2, the holder hereof shall
thereafter be entitled to purchase, at the Exercise Price resulting from such
adjustment, the number of shares of Common Stock (calculated to the nearest
1/100th of a share) obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
purchasable hereunder immediately prior to such
-8-
12
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
4.2. ADJUSTMENT OF EXERCISE PRICE. In addition to any adjustment required
under the provisions of section 4.5 below, and except as otherwise provided in
section 4.2(n) below, the Exercise Price shall be subject to adjustment from
time to time as set forth in this section 4.2.
(a) STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS.
If and whenever the Company subsequent to the date hereof:
(i) declares a dividend upon, or makes any distribution in
respect of, any of its capital stock, payable in shares of Common
Stock, Convertible Securities or Stock Purchase Rights, or
(ii) subdivides its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(iii) combines its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to such
event by a fraction (A) the numerator of which shall be the total
number of outstanding shares of Common Stock immediately prior to such
event, and (B) the denominator of which shall be the total number of
outstanding shares of Common Stock immediately after such event,
treating as outstanding all shares of Common Stock issuable upon
conversions or exchanges of such Convertible Securities and exercises
of such Stock Purchase Rights.
(b) ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. If and whenever
the Company subsequent to the date hereof shall issue or sell any shares of
Common Stock (except as otherwise provided in the last paragraph of this
section 4.2(b)), for a consideration less than the greater of (x) the
Exercise Price and (y) the Current Market Price per - - share (determined,
in each case, as of the date specified in the next succeeding paragraph),
the Exercise Price upon each such issuance or sale shall be adjusted to the
lower of the prices calculated pursuant to the following clauses (i) and
(ii) of this section 4.2(b) and shall be determined by:
(i) DIVIDING (A) an amount equal to the sum of (1) the number
of shares of Common Stock outstanding immediately prior to such issue
or sale multiplied by the Exercise Price in effect as of the date
specified
-9-
13
in the next succeeding paragraph plus (2) the aggregate consideration,
if any, received by the Company upon such issue or sale, by (B) the
total number of shares of Common Stock outstanding immediately after
such issue or sale; and
(ii) MULTIPLYING the Exercise Price in effect as of the date
specified in the next succeeding paragraph by a fraction the numerator
of which is (A) the sum of (1) the number of shares of Common Stock
outstanding immediately prior to such issue or sale multiplied by the
Current Market Price per share of Common Stock immediately prior to
such issue or sale plus (2) the aggregate consideration, if any,
received by the Company upon such issue or sale, divided by (B) the
total number of shares of Common Stock outstanding immediately after
such issue or sale, and the denominator of which is the Current Market
Price per share of Common Stock immediately prior to such issue or
sale.
For purposes of this section 4.2(b), the date as of which the
Exercise Price and the date as of which the Current Market Price shall be
determined shall be the earlier of (i) the date on which the Company shall
enter into a firm contract for the issuance of such shares of Common Stock
and (ii) the date of actual issuance of such shares of Common Stock.
No adjustment of the Exercise Price shall be made under this section
4.2(b) upon the issuance of any shares of Common Stock which are (i)
distributed to holders of Common Stock pursuant to a stock dividend or
subdivision for which an adjustment is provided under section 4.2(a) or
(ii) issued pursuant to the exercise of any Stock Purchase Rights or
pursuant to the conversion or exchange of any Convertible Securities to the
extent that an adjustment shall previously have been made upon the issuance
of such Stock Purchase Rights or Convertible Securities pursuant to
sections 4.2(a), (c) or (d).
(c) ISSUANCE OF STOCK PURCHASE RIGHTS. If and whenever the Company
subsequent to the date hereof shall issue or sell any Stock Purchase Rights
and the consideration per share for which shares of Common Stock may at any
time thereafter be issuable upon exercise thereof (or, in the case of Stock
Purchase Rights exercisable for the purchase of Convertible Securities,
upon the subsequent conversion or exchange of such Convertible Securities)
shall be less than the greater of (x) the Exercise Price and (y) the
Current Market Price per share (determined, in each
-10-
14
case, as of the date specified in the next succeeding paragraph), the
Exercise Price upon each such issuance or sale shall be adjusted as
provided in section 4.2(b) on the basis that the maximum number of shares
of Common Stock ever issuable upon exercise of such Stock Purchase Rights
(or upon conversion or exchange of such Convertible Securities following
such exercise) shall be deemed to have been issued as of the date of the
determination of the Exercise Price or the Current Market Price, as
applicable, specified in the next succeeding paragraph.
For the purposes of this section 4.2(c), the date as of which the
Exercise Price and the date as of which the Current Market Price shall be
determined shall be the earlier of (i) the date on which the Company shall
enter into a firm contract for the issuance of such Stock Purchase Rights
and (ii) the date of actual issuance of such Stock Purchase Rights.
(d) ISSUANCE OF CONVERTIBLE SECURITIES. If and whenever the Company
subsequent to the date hereof shall issue or sell any Convertible
Securities (except as otherwise provided in the last paragraph of this
section 4.2(d)) and the consideration per share for which shares of Common
Stock may at any time thereafter be issuable pursuant to the terms of such
Convertible Securities shall be less than the greater of (x) the Exercise
Price and (y) the Current Market Price per share (determined, in each case,
as of the date specified in the next succeeding paragraph), the Exercise
Price upon each such issuance or sale shall be adjusted as provided in
section 4.2(b) on the basis that the maximum number of shares of Common
Stock ever necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued as of the date
of the determination of the Exercise Price or the Current Market Price, as
applicable, specified in the next succeeding paragraph.
For the purposes of this section 4.2(d), the date as of which the
Exercise Price and the date as of which the Current Market Price shall be
determined shall be the earlier of (i) the date on which the Company shall
enter into a firm contract for the issuance of such Convertible Securities
and (ii) the date of actual issuance of such Convertible Securities.
No adjustment of the Exercise Price shall be made under this section
4.2(d) upon the issuance of any Convertible Securities which are issued
pursuant to the exercise of any Stock Purchase Rights to the extent that an
adjustment shall
-11-
15
previously have been made upon the issuance of such Stock Purchase Rights
pursuant to section 4.2(c).
(e) MINIMUM ADJUSTMENT. If any adjustment of the Exercise Price
pursuant to this section 4.2 shall result in an adjustment of less than
$.0001, no such adjustment shall be made, but any such lesser adjustment
shall be carried forward and shall be made at the time and together with
the next subsequent adjustment which, together with any adjustments so
carried forward, shall amount to $.0001; PROVIDED that upon any adjustment
of the Exercise Price resulting from (i) the declaration of a dividend
upon, or the making of any distribution in respect of, any stock of the
Company payable in Common Stock, Stock Purchase Rights or Convertible
Securities or (ii) the reclassification by subdivision, combination or
otherwise, of the Common Stock into a greater or smaller number of shares,
the foregoing figure of $.0001 per share (or such figure as last adjusted)
shall be proportionately adjusted, and PROVIDED, FURTHER, that upon the
exercise of this Warrant, the Company shall make all necessary adjustments
(to the nearest .0001 of a cent) not theretofore made to the Exercise Price
up to and including the date upon which this Warrant is exercised.
(f) READJUSTMENT OF EXERCISE PRICE. Upon each change in (i) the
purchase price payable for any Stock Purchase Rights or Convertible
Securities referred to in section 4.2(c) or (d), (ii) the consideration, if
any, payable upon exercise of such Stock Purchase Rights or upon the
conversion or exchange of such Convertible Securities or (iii) the number
of shares of Common Stock issuable upon the exercise of such Stock Purchase
Rights or the rate at which such Convertible Securities are convertible
into or exchangeable for shares of Common Stock, the Exercise Price in
effect at the time of such event shall forthwith be readjusted to the
Exercise Price which would have been in effect at such time had such Stock
Purchase Rights or Convertible Securities provided for such changed
purchase price, consideration, number of shares of Common Stock so issuable
or conversion rate, as the case may be, at the time initially granted,
issued or sold. On the expiration of any Stock Purchase Rights not
exercised or of any right to convert or exchange under any Convertible
Securities not exercised, the Exercise Price then in effect shall forthwith
be increased to the Exercise Price which would have been in effect at the
time of such expiration had such Stock Purchase Rights or Convertible
Securities never been issued. No readjustment of the Exercise Price
pursuant to this section 4.2(f) shall (i) increase the Exercise Price by an
amount in excess of the adjustment originally made to the Exercise Price in
respect of the issue, sale or grant of the
-12-
16
applicable Stock Purchase Rights or Convertible Securities or (ii) require
any adjustment to the amount paid or number of shares of Common Stock
received by any Person upon any exercise of this Warrant prior to the date
upon which such readjustment to the Exercise Price shall occur.
(g) REORGANIZATION, RECLASSIFICATION OR RECAPITALIZATION OF COMPANY.
If and whenever subsequent to the date hereof the Company shall effect (i)
any reorganization or reclassification or recapitalization of the capital
stock of the Company (other than in the cases referred to in section
4.2(a)), (ii) any consolidation or merger of the Company with or into
another Person, (iii) the sale, transfer or other disposition of the
property, assets or business of the Company as an entirety or substantially
as an entirety or (iv) any other transaction (or any other event shall
occur) as a result of which holders of Common Stock become entitled to
receive any shares of stock or other securities and/or property (including,
without limitation, cash, but excluding any cash dividend that is paid out
of the earnings or surplus of the Company legally available therefor) with
respect to or in exchange for the Common Stock of the Company, there shall
thereafter be deliverable upon the exercise of this Warrant or any portion
thereof (in lieu of or in addition to the Warrant Shares theretofore
deliverable, as appropriate) the highest number of shares of stock or other
securities and/or the greatest amount of property (including, without
limitation, cash) to which the holder of the number of Warrant Shares which
would otherwise have been deliverable upon the exercise of this Warrant or
any portion thereof at the time would have been entitled upon such
reorganization or reclassification or recapitalization of capital stock,
consolidation, merger, sale, transfer, disposition or other transaction or
upon the occurrence of such other event, and at the same aggregate Exercise
Price.
Prior to and as a condition of the consummation of any transaction or
event described in the preceding sentence, the Company shall make
equitable, written adjustments in the application of the provisions herein
set forth satisfactory to the holder or holders of Warrants at the time
outstanding so that the provisions set forth herein shall thereafter be
applicable, as nearly as possible, in relation to any shares of stock or
other securities or other property thereafter deliverable upon exercise of
the Warrants. Any such adjustment shall be made by and set forth in a
supplemental agreement of the Company and/or the successor entity, as
applicable, for the benefit of and in form and substance acceptable to the
holder or holders of the Warrants at the time outstanding, which agreement
shall bind each such
-13-
17
entity and shall be accompanied by a favorable opinion of the regular
outside counsel to the Company (or such other firm as is reasonably
acceptable to the holder or holders of the Warrants at the time
outstanding) as to the enforceability of such agreement and as to such
other matters as such holder or holders may reasonably request.
(h) OTHER DILUTIVE EVENTS. If any other transaction or event (other
than those explicitly referred to in this section 4.2), including, without
limitation, distributions of property or assets of the Company or its
affiliates to Persons other than holders of Common Stock, shall occur as to
which the other provisions of this section 4 are not strictly applicable
but the failure to make any adjustment to the Exercise Price or to any of
the other terms of this Warrant would not fairly protect the purchase
rights and other rights represented by this Warrant in accordance with the
essential intent and principles hereof, then, and as a condition to the
consummation of any such transaction or event, and in each such case, the
Company shall appoint a firm of independent certified public accountants of
recognized national standing (which may be the regular auditors of the
Company), which shall give its opinion as to the adjustment, if any, on a
basis consistent with the essential intent and principles established in
this section 4, necessary to preserve, without dilution, the rights
represented by this Warrant. The certificate of any such firm of
accountants shall be conclusive evidence of the correctness of any
computation made under this section 4. The Company shall pay the fees and
expenses of such firm of accountants in connection with any such opinion.
Upon receipt of such opinion, the Company will promptly mail a copy thereof
to the holder of this Warrant and shall make the adjustments described
therein.
(i) DETERMINATION OF CONSIDERATION. For purposes of this section 4,
the consideration received or receivable by the Company for the issuance,
sale, grant or assumption of shares of Common Stock, Stock Purchase Rights
or Convertible Securities, irrespective of the accounting treatment of such
consideration, shall be valued and determined as follows:
(i) CASH PAYMENT. In the case of cash, the net amount received
by the Company after deduction of any accrued interest or dividends,
any expenses paid or incurred and any underwriting commissions or
concessions paid or allowed by the Company in connection with such
issue or sale.
(ii) NON-CASH PAYMENT. In the case of consideration other than
cash, the Fair Value thereof
-14-
18
or, if less, in the case of any security, the Current Market Price of
such security, if applicable (in any case as of the date immediately
preceding the issuance, sale or grant in question).
(iii) CERTAIN ALLOCATIONS. If shares of Common Stock, Stock
Purchase Rights and/or Convertible Securities are issued or sold
together with other securities or other assets of the Company for a
consideration which covers more than one of the foregoing categories
of securities and assets, the consideration received or receivable
(computed as provided in clauses (i) and (ii) of this section 4.2 (i))
shall be allocable to such shares of Common Stock, Stock Purchase
Rights and/or Convertible Securities as reasonably determined in good
faith by the Board of Directors of the Company (PROVIDED such
allocation is set forth in a written resolution and a certified copy
thereof is furnished to the holder of this Warrant promptly (but in
any event within 10 days) following its adoption).
(iv) DIVIDENDS IN SECURITIES. If the Company shall declare a
dividend or make any other distribution upon any stock of the Company
payable in shares of Common Stock, Convertible Securities or Stock
Purchase Rights, such shares of Common Stock, Convertible Securities
or Stock Purchase Rights, as the case may be, issuable in payment of
such dividend or distribution shall be deemed to have been issued or
sold without consideration.
(v) STOCK PURCHASE RIGHTS AND CONVERTIBLE SECURITIES. The
consideration for which shares of Common Stock shall be deemed to be
issued upon the issuance or sale of any Stock Purchase Rights or
Convertible Securities shall be determined by dividing (A) the total
consideration, if any, received by the Company as consideration for
the Stock Purchase Rights or the Convertible Securities, as the case
may be, plus the minimum aggregate amount of additional consideration,
if any, ever payable to the Company upon the exercise of such Stock
Purchase Rights or upon the conversion or exchange of such Convertible
Securities, as the case may be, in each case after deducting any
accrued interest or dividends, any expenses paid or incurred and any
underwriting commissions or concessions paid or allowed by the Company
in connection with such issue or sale; by (B) the maximum number of
shares of Common Stock ever issuable upon the
-15-
19
exercise of such Stock Purchase Rights or upon the conversion or
exchange of such Convertible Securities.
(vi) MERGER, CONSOLIDATION OR SALE OF ASSETS. If any shares of
Common Stock, Convertible Securities or Stock Purchase Rights are
issued in connection with any merger or consolidation of which the
Company is the surviving corporation, the amount of consideration
therefor shall be deemed to be the Fair Value of such portion of the
assets and business of the non-surviving corporation as shall be
attributable to such Common Stock, Convertible Securities or Stock
Purchase Rights, as the case may be. In the event of (a) any merger or
consolidation of which the Company is not the surviving corporation or
(b) the sale, transfer or other disposition of the property, assets or
business of the Company as an entirety or substantially as an entirety
for stock or other securities of any other Person, the Company shall
be deemed to have issued the number of shares of its Common Stock for
stock or securities of the surviving corporation or such other Person
computed on the basis of the actual exchange ratio on which the
transaction was predicated and for a consideration equal to the Fair
Value on the date of such transaction of such stock or securities of
the surviving corporation or such other Person, and if any such
calculation results in adjustment of the Exercise Price, the
determination of the number of Warrant Shares issuable upon exercise
of this Warrant immediately prior to such merger, consolidation or
sale, for the purposes of section 4.2(g), shall be made after giving
effect to such adjustment of the Exercise Price.
(j) RECORD DATE. If the Company shall take a record of the holders
of the Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Convertible
Securities or Stock Purchase Rights or (ii) to subscribe for or purchase
Common Stock, Convertible Securities or Stock Purchase Rights, then all
references in this section 4 to the date of the issue or sale of the shares
of Common Stock deemed to have been issued or sold upon the declaration of
such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may be,
shall be deemed to be references to such record date.
(k) SHARES OUTSTANDING. The number of shares of Common Stock deemed
to be outstanding at any given time
-16-
20
shall not include shares of Common Stock held by the Company or any
Subsidiary of the Company.
(l) MAXIMUM EXERCISE PRICE. At no time shall the Exercise Price exceed
the amount set forth in the first paragraph of the Preamble of this Warrant
except as a result of an adjustment thereto pursuant to section 4.2(a)(iii)
or 4.2(g).
(m) APPLICATION. All subdivisions of this section 4.2 are intended to
operate independently of one another. If a transaction or an event occurs
that requires the application of more than one subdivision, all applicable
subdivisions shall be given independent effect.
(n) NO ADJUSTMENTS UNDER CERTAIN CIRCUMSTANCES. Anything herein to
the contrary notwithstanding, no adjustment to the Exercise Price shall be
made in the case of:
(i) any issuance of shares of Common Stock (or Other Securities)
upon the exercise in whole or part of any Warrant; or
(ii) (A) the granting by the Company of Stock Purchase Rights to
its employees and directors pursuant to its existing stock option
plans and any other employee benefit plans approved by the Board of
Directors of the Company and (B) the issuance of shares of Common
Stock pursuant to the exercise of such Stock Purchase Rights; PROVIDED
that the aggregate number of shares of Common Stock to which this
clause (ii) shall apply shall not exceed 1,100,000 (such number to be
appropriately adjusted for stock splits, stock dividends, combinations
and similar events).
4.3. RIGHTS OFFERING. If the Company shall effect an offering of Common
Stock pro rata among its stockholders, the holder hereof shall be entitled, at
its option, to elect to participate in each and every such offering as if this
Warrant had been exercised and such holder were, at the time of any such rights
offering, then a holder of that number of Warrant Shares to which such holder is
then entitled on the exercise hereof.
4.4. CERTIFICATES AND NOTICES.
(a) ADJUSTMENTS TO EXERCISE PRICE. As promptly as practicable (but in
any event not later than five days) after the occurrence of any event
requiring any adjustment under this section 4 to the Exercise Price (or to
the number or kind of securities or other property deliverable upon the
-17-
21
exercise of this Warrant), the Company shall, at its expense, mail to the
holder of this Warrant either (i) an Officers' Certificate or (ii) a
certificate signed by a firm of independent certified public accountants of
recognized national standing (which may be the regular auditors of the
Company), setting forth in reasonable detail the events requiring the
adjustment and the method by which such adjustment was calculated and
specifying the adjusted Exercise Price and the number of shares of Common
Stock purchasable upon exercise of this Warrant after giving effect to such
adjustment. The certificate of any such firm of accountants shall be
conclusive evidence of the correctness of any computation made under this
section 4.
(b) EXTRAORDINARY CORPORATE EVENTS. If and whenever the Company
subsequent to the date hereof shall propose to (i) pay any dividend payable
in stock to the holders of shares of Common Stock or to make any other
distribution to the holders of shares of Common Stock, (ii) offer to the
holders of shares of Common Stock rights to subscribe for or purchase any
additional shares of any class of stock or any other rights or options or
(iii) effect any reclassification of the Common Stock (other than a
reclassification involving merely the subdivision or combination of
outstanding shares of Common Stock), (iv) engage in any reorganization or
recapitalization or any consolidation or merger (other than a merger in
which no distribution of securities or other property is to be made to
holders of shares of Common Stock), (v) consummate any sale, transfer or
other disposition of its property, assets and business as an entirety or
substantially as an entirety, (vi) effect any other transaction which might
require an adjustment to the Exercise Price (or to the number or kind of
securities or other property deliverable upon the exercise of this
Warrant), including, without limitation, any transaction of the kind
described in section 4.2(g) or (vii) commence or effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the
Company shall mail to the holder of this Warrant an Officers' Certificate
giving notice of such proposed action, specifying (A) the date on which the
stock transfer books of the Company shall close, or a record shall be
taken, for determining the holders of Common Stock entitled to receive such
stock dividends or other distribution or such rights or options, or the
date on which such reclassification, reorganization, recapitalization,
consolidation, merger, sale, transfer, other disposition, transaction,
liquidation, dissolution or winding up shall take place or commence, as the
case may be, and (B) the date as of which it is expected that holders of
Common Stock of record shall be entitled to receive securities or other
property deliverable upon such action,
-18-
22
if any such date is to be fixed. Such Officers' Certificate shall be mailed
in the case of any action covered by clause (i) or (ii) above, at least 30
days prior to the record date for determining holders of Common Stock for
purposes of receiving such payment or offer, and, in any other case, at
least 30 days prior to the date upon which such action takes place and 20
days prior to any record date to determine holders of Common Stock entitled
to receive such securities or other property.
(c) EFFECT OF FAILURE. Failure to give any certificate or notice, or
any defect in any certificate or notice required under this section 4.4
shall not affect the legality or validity of the adjustment of the Exercise
Price or the number of Warrant Shares purchasable upon exercise of this
Warrant.
4.5. ADJUSTMENTS FOR CHANGES IN CERTAIN DATA. The Company hereby agrees
that the initial aggregate number of shares of Common Stock issuable upon
exercise in full of the Warrants issued on the Closing Date to the initial
holder thereof is ________ and such number of shares was calculated in
accordance with the terms of the Letter Agreement. If for any reason such
calculation was incorrect in any respect, the Company shall forthwith reissue
each Warrant with appropriate adjustments in the Exercise Price and in the
number of shares issuable upon exercise hereof (together with an Officers'
Certificate setting forth in reasonable detail the computation of such
adjustments).
5. RESERVATION OF COMMON STOCK.
The Company will at all times reserve and keep available, solely for
issuance, sale and delivery upon the exercise of this Warrant, such number of
shares of Common Stock equal to the number of shares of Common Stock (and/or
Other Securities) issuable upon the exercise of this Warrant. All such shares of
Common Stock (and/or Other Securities) shall be duly authorized and, when issued
upon exercise of this Warrant, will be validly issued and fully paid and
nonassessable with no liability on the part of the holders thereof.
6. REGISTRATION, ETC.
6.1. CERTAIN DEFINITIONS. As used in this section 6, the following terms
have the following respective meanings:
(a) "REGISTER", "REGISTERED" and "REGISTRATION" refer to a
registration effected by filing a registration statement in compliance with
the Securities Act to permit
-19-
23
the sale and disposition of the Warrant Shares and any amendment filed or
required to be filed to permit any such disposition;
(b) "QUALIFICATION" or "COMPLIANCE" refer to the qualification or
compliance of all Warrant Shares included in any registration pursuant to
this section 6 under all applicable blue sky or other state securities
laws; and
(c) "REGISTRATION EXPENSES" shall mean all fees, expenses and
disbursements related to any registration, qualification or compliance
pursuant to this section 6, including, without limitation, all registration
and filing fees, blue sky fees and expenses, printing expenses, fees and
disbursement of counsel (including, without limitation, the fees, expenses
and disbursements of one firm of attorneys for the holders of the Warrants
and/or Warrant Shares), and expenses of any special audits incident to or
required by any registration, qualification or compliance, except that
Registration Expenses shall not include any underwriters' discounts or
commissions attributable to any Warrant Shares registered and sold pursuant
to any such registration.
6.2. REGISTRATION ON REQUEST.
(a) In case the Company shall receive from one or more holders of any
Warrants and/or Warrant Shares a written request or requests that the
Company effect any registration, qualification and/or compliance of any
Warrant Shares held by (or issuable to) such holder or holders, and
specifying the intended method of sale and distribution, the Company will:
(i) promptly give written notice of the proposed registration,
qualification and/or compliance to each holder of any Warrants and/or
Warrant Shares; and
(ii) as soon as practicable, effect such registration,
qualification and/or compliance (including, without limitation, the
execution of an undertaking for post effective amendments, appropriate
qualification under applicable blue sky or other state securities laws
and appropriate compliance with exemptive regulations issued under the
Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of such amount of Warrant Shares (including the exercise
of any Warrants and the sale and distribution of any Warrant Shares
issuable upon such exercise) as is specified in a
-20-
24
written request or requests, made within 30 days after receipt of such
written notice from the Company, by any holder or holders of any
Warrants or Warrant Shares.
(b) The obligations of the Company under this section 6.2 are subject
to the following qualifications:
(i) except as otherwise provided in section 6.2(b)(iii), the
Company shall be obligated to effect only two registrations pursuant
to this section 6.2 and section 6.2 in each of the other Warrants;
PROVIDED that the Company shall not be obligated to effect any such
registration unless the holders of a majority in interest of the
Warrants and Warrant Shares then outstanding shall have made such
request for registration;
(ii) the Company shall pay all Registration Expenses related to
any registration, qualification and compliance effected pursuant to
this section 6.2;
(iii) if, in connection with any registration of Warrant Shares
pursuant to this section 6.2, the holders of Warrants and Warrant
Shares requesting registration are unable (for reasons beyond the
control of such holders) to include in such registration all of the
Warrant Shares for which registration has been requested, then the
holder or holders of the Warrants and Warrant Shares shall be entitled
to an additional registration of Warrant Shares pursuant to this
section 6.2; and
(iv) the Company shall not be obligated to cause any
registration, qualification and/or compliance pursuant to this section
6.2 to become effective prior to the first anniversary of the Closing
Date.
6.3. INCIDENTAL REGISTRATION.
(a) If the Company at any time or from time to time shall determine to
register any of its securities (whether in connection with an offering by
the Company or others) (otherwise than pursuant to a registration on a form
inappropriate for an underwritten public offering or relating solely to
securities to be issued in a merger, acquisition of the stock or assets of
another entity or in a similar transaction), then, in each such case, the
Company will:
(i) furnish prompt notice thereof (which shall include a list of
the jurisdictions in which the
-21-
25
Company intends to register or qualify such securities under the
applicable blue sky or other state securities laws) to each holder of
Warrants and/or Warrant Shares; and
(ii) include among the securities which it then registers or
qualifies all Warrant Shares specified by any holder thereof in a
written request or requests, made within 30 days after receipt of such
written notice from the Company.
(b) The obligations of the Company under this section 6.3 are subject
to the following qualifications:
(i) the Company shall pay all Registration Expenses related to
any registration, qualification or compliance effected pursuant to
this section 6.3; and
(ii) if, in connection with any underwritten offering pursuant to
this section 6.3, (A) the managing underwriter shall impose a
limitation on the number or kind of securities which may be included
in any such registration statement because, in its judgment, such
limitation is necessary to effect an orderly public distribution and
(B) such limitation is imposed pro rata with respect to all securities
whose holders have an incidental (or piggyback) right to include such
securities in the registration statement and as to which inclusion has
been requested pursuant to such right, then the Company shall be
obligated to include in such registration statement only such limited
portion (which may be none) of such Warrant Shares with respect to
which such holder or holders have requested inclusion hereunder as is
determined in good faith by such managing underwriter.
6.4. PERMITTED REGISTRATION. If and to the extent that any holder or
holders of any Warrants and/or Warrant Shares shall have, at the time of
delivery of the written request referred to in section 6.3, no present intention
of selling or distributing any Warrant Shares, the Company shall be obligated to
effect such registration, qualification and/or compliance with respect to any
Warrant Shares of such holder or holders only if and to the extent, in each
case, that such registration, qualification and/or compliance are at the time
permitted by the applicable statutes or rules and regulations thereunder or the
practices of the governmental authority concerned.
6.5. REGISTRATION PROCEDURES. In the case of each registration,
qualification and/or compliance contemplated by this section 6, the Company will
keep the holder or holders of
-22-
26
Warrants and/or Warrant Shares advised in writing as to the initiation of
proceedings for such registration, qualification and compliance and as to the
completion thereof, and will advise each such holder, upon request, of the
progress of such proceedings. At the expense of the Company or of the party or
parties bearing the expenses of such registration, qualification and compliance,
the Company will (a) keep such registration, qualification and compliance
current and effective by such action as may be necessary or appropriate,
including, without limitation, the filing of post-effective amendments and
supplements to any registration statement or prospectus, for such period as is
necessary to permit the sale and distribution of the Warrant Shares pursuant
thereto, (b) take all necessary action under any applicable blue sky or other
state securities law to permit such sale and/or distribution, all as requested
by such holders, and (c) furnish each holder of Warrant Shares included therein
such number of registration statements, prospectuses, supplements, amendments,
offering circulars and other documents incident thereto as such holder from time
to time may reasonably request.
6.6. INDEMNIFICATION. The Company will indemnify, defend and hold harmless
each holder of Warrant Shares included in any registration, qualification and/or
compliance contemplated by this section 6 and each underwriter of such
securities, and each Person, if any, who controls each such holder and
underwriter within the meaning of the Securities Act (each, an "Indemnified
Person"), to the fullest extent enforceable under applicable law against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus, supplement,
amendment, offering circular or other document related to any registration,
qualification or compliance or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation (or alleged violation) of
the Securities Act or other securities laws in connection with any such
registration, qualification or compliance, and will reimburse each such
Indemnified Person for any legal or any other expenses reasonably incurred in
connection with investigating and/or defending (and/or preparing for any
investigation or defense of) any such claim, loss, damage, liability, action or
violation; PROVIDED that the Company will not be liable in any such case to any
such Indemnified Person if, but only to the extent that, any such claim, loss,
damage, liability, action, violation or expense is finally determined to arise
out of or result from any untrue statement in or omission from written
information furnished to the Company by an instrument duly executed by such
Indemnified Person and stated to be specifically for use therein. Each such
holder will, if securities held by or
-23-
27
issuable to such holder are included in the securities as to which such
registration, qualification and/or compliance is being effected, indemnify,
defend and hold harmless the Company, each of its directors and officers who
signs the related registration statement, and each Person, if any, who controls
the Company within the meaning of the Securities Act, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, supplement,
amendment, offering circular or other document or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and such directors, officers or Persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending
(and/or preparing for any investigation or defense of) any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) was made in (or omitted from) such registration statement, prospectus,
supplement, amendment, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such holder and stated to be specifically for use therein;
PROVIDED that the liability of any such holder hereunder shall be limited to the
net sales proceeds actually received by such holder as a result of the sale by
it of securities in such registration.
6.7. RESTRICTIONS ON OTHER AGREEMENTS. The Company covenants that it will
not grant any right relating to the registration of its securities the exercise
of which interferes with or is inconsistent with (or could reasonably be
expected to interfere with or be inconsistent with) the rights granted
hereunder, without the prior written consent of the holders of the Warrants and
the Warrant Shares.
7. VARIOUS COVENANTS OF THE COMPANY.
7.1. NO IMPAIRMENT OR AMENDMENT. The Company shall not by any action
including, without limitation, amending its charter, any reorganization,
recapitalization, 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 action as may be necessary or appropriate to protect the
rights of the holder hereof against impairment. Without limiting the generality
of
-24-
28
the foregoing, the Company (a) will not increase the par value of any Warrant
Shares above the amount payable therefor upon such exercise, (b) will take all
such action as may be necessary or appropriate in order that the Company may
validly issue fully paid and nonassessable Warrant Shares, (c) will obtain and
maintain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction as may be necessary to enable the Company to
perform its obligations under this Warrant, (d) will not issue any capital stock
or enter into any agreement, the terms of which would have the effect, directly
or indirectly, of preventing the Company from honoring its obligations hereunder
and (e) will not redeem, other than pro rata, any shares of the Common Stock.
So long as any Warrants or Warrant Shares are outstanding, the Company will
acknowledge in writing, in form satisfactory to any holder of any such security,
the continued validity of the Company's obligations hereunder.
7.2. AVAILABILITY OF INFORMATION. The Company will take such action as any
holder of any Warrants or Warrant Shares may reasonably request, all to the
extent required from time to time to facilitate any sale or disposition by any
such holder of any such securities without registration under the Securities Act
and/or any applicable state securities laws within the limitation of the
exemptions provided by any rule or regulation thereunder, including, without
limitation, Rule 144A under the Securities Act. In addition, the Company will
cooperate with each holder of any Warrants or Warrant Shares in supplying such
information as may be necessary for such holder or holders to complete and file
any information reporting forms presently or hereafter required by any
regulatory authority, including, without limitation, the Commission, as a
condition to the transfer of any such securities or to the availability of an
exemption from the Securities Act and/or any applicable state securities law for
the sale or other disposition of any Warrant or any Warrant Shares. The Company
will file all reports required to be filed by it under the Securities Act and
the Exchange Act and all rules and regulations adopted by the Commission
thereunder (or, if the Company is not required to file such reports, it will,
upon the request of any holder of any Warrants or Warrant Shares, make publicly
available other information so long as necessary to permit sales of such
securities pursuant to Rule 144 or any other similar rule or regulation under
the Securities Act).
7.3. ANTI-DILUTION PROVISIONS. If the Company issues any Stock Purchase
Rights or Convertible Securities or other securities containing provisions
protecting the holder or holders thereof against dilution in any manner more
favorable to such holder or holders thereof than those set forth in this
Warrant, such provisions (or any more favorable portion thereof) shall be
-25-
29
deemed to be incorporated herein as if fully set forth in this Warrant and, to
the extent inconsistent with any provision of this Warrant, shall be deemed to
be substituted therefor.
7.4. INDEMNIFICATION. The Company shall indemnify, save and hold harmless
the holder of this Warrant and the holder of any Warrant Shares from and against
any and all liability, loss, cost, damage, reasonable attorneys' and
accountants' fees and expenses, court costs and all other out-of-pocket expenses
incurred by such holder in connection with interpreting, preserving, exercising
and/or enforcing any of the terms hereof.
7.5. CERTAIN EXPENSES. The Company shall pay all expenses in connection
with, and all taxes (other than stock transfer taxes) and other governmental
charges that may be imposed in respect of, the issue, sale and delivery of this
Warrant and any Warrant Shares.
7.6. LISTING ON SECURITIES EXCHANGES, ETC. At all times following the
exercise of this Warrant, the Company will maintain the listing of all Warrant
Shares on each securities exchange or market or trading system on which the
Common Stock (or Other Securities) is then or at any time thereafter listed or
traded.
8. MISCELLANEOUS.
8.1. NONWAIVER. No course of dealing or any delay or failure to exercise
any right, power or remedy hereunder on the part of the holder of this Warrant
or of any Warrant Shares shall operate as a waiver of or otherwise prejudice
such holder's rights, powers or remedies.
8.2. AMENDMENT. Any term, covenant, agreement or condition of the Warrants
may, with the consent of the Company, be amended, or compliance therewith may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only by one or more substantially concurrent written instruments
signed by the holder or holders of a majority in interest of the Warrants and
the Warrant Shares then outstanding.
8.3. COMMUNICATIONS. All communications provided for herein shall be
delivered, mailed or sent by facsimile transmission addressed as follows:
(a) If to the Company, at:
-26-
30
CardioTech International, Inc.
11 State Street
Woburn, Massachusetts 01801
Attention: President and Chief Executive Officer
Telecopier No.: (617) ____________
with a copy (which shall not constitute notice)
to:
Mintz, Levin, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Attention: Jeffrey M. Wiesen, Esq.
Telecopier No.: (617) 542-2241
(b) If to the holder of any Warrant or of any Warrant Shares, to such
holder at its address appearing on the Warrant Register, with a copy (which
shall not constitute notice) to:
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Frank B. Porter, Jr., Esq.
Telecopy No.: (617) 248-4000
The address of the Company may be changed at any time and from time to time
and shall be the most recent such address furnished in writing by the Company to
the holder or holders of the Warrants and Warrant Shares. The address of any
such holder for any purpose hereof may be changed at any time and from time to
time and shall be the most recent such address furnished in writing by such
holder to the Company.
Any communication provided for herein shall become effective only upon and
at the time of receipt by the Person to whom it is given, unless such
communication is mailed by certified mail (return receipt requested) or
reputable overnight courier, in which case it shall be deemed to have been
received on (a) the fifth Business Day following the mailing thereof, or (b) the
day of its acknowledged receipt, if a Business Day, or the next succeeding
Business Day, whichever of (a) or (b) is earlier.
Any communication provided for herein given by facsimile transmission shall
become effective upon receipt of confirmation of receipt of transmission from
the Person to whom the transmission was sent, PROVIDED that the original of such
communication is sent on the day of such facsimile transmission to such Person
by a courier guaranteeing overnight delivery.
-27-
31
8.4. LIKE TENOR. All Warrants shall at all times be identical, except as to
the Preamble.
8.5. REMEDIES. The Company stipulates that the remedies at law of the
holder or holders of the Warrants and of Warrant Shares in the event of any
default or threatened default by the Company in the performance of or compliance
with any of the terms of the Warrants are not and will not be adequate and that,
to the fullest extent permitted by law, such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
8.6. SUCCESSORS AND ASSIGNS. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Company, the holder or holders of this Warrant and of the Warrant Shares, to
the extent provided herein, and shall be enforceable by such holder or holders.
8.7. MODIFICATION AND SEVERABILITY. If, in any action before any court or
agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is unenforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
8.8. INTEGRATION. This Warrant replaces all prior agreements, supersedes
all prior negotiations and, together with the Letter Agreement, constitutes the
entire agreement of the parties with respect to the transactions contemplated
herein.
8.9. HEADINGS. The headings of the sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
8.10. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. This Warrant,
including the validity hereof and the rights and obligations of the Company and
of the holder hereof and all amendments and supplements hereof and all waivers
and consents hereunder, shall be construed in accordance with and governed by
the domestic substantive laws of The Commonwealth of Massachusetts without
giving effect to any choice of law or conflicts of law provision or rule that
would cause the application of the domestic substantive laws of any other
jurisdiction. The Company, to the extent that it may lawfully do so, hereby
consents to service of process, and to be sued, in The
-28-
32
Commonwealth of Massachusetts and consents to the jurisdiction of the courts of
The Commonwealth of Massachusetts and the United States District Court for the
District of Massachusetts, as well as to the jurisdiction of all courts to which
an appeal may be taken from such courts, for the purpose of any suit, action or
other proceeding arising out of any of its obligations hereunder or with respect
to the transactions contemplated hereby, and expressly waives any and all
objections it may have as to venue in any such courts. The Company further
agrees that a summons and complaint commencing an action or proceeding in any of
such courts shall be properly served and shall confer personal jurisdiction if
served personally or by certified mail to it at its address set forth in section
8.3 or as otherwise provided under the laws of The Commonwealth of
Massachusetts. Notwithstanding the foregoing, the Company agrees that nothing
contained in this section 8.10 shall preclude the institution of any such suit,
action or other proceeding in any jurisdiction other than The Commonwealth of
Massachusetts. The Company irrevocably waives all right to a trial by jury in
any suit, action or other proceeding instituted by or against it in respect of
its obligations hereunder or the transactions contemplated hereby.
[The remainder of this page is left blank intentionally.]
-29-
33
IN WITNESS WHEREOF, CARDIOTECH INTERNATIONAL, INC. has caused this Warrant
to be executed as an instrument under seal and to be attested by its duly
authorized officers as of the date first above written.
CARDIOTECH INTERNATIONAL,INC.
By: _____________________________
(Title)
Attest:
_____________________________
(Title)
County of _____________________ )
Commonwealth of Massachusetts ) ss. May __, 1996
On this _____ day of May 1996, before me appeared ____________________ ,
________________ of CardioTech International, Inc., to me known and known by me
to be the party executing the foregoing instrument on behalf of said
corporation, and [HE/SHE] acknowledged said instrument by [HIM/HER] executed to
be [HIS/HER] free act and deed and the free act and deed of said corporation.
_________________________________
Notary Public
My commission expires:___________
-30-
34
FORM OF NOTICE OF EXERCISE
(To be executed only upon partial or full exercise
of the within Warrant)
The undersigned registered holder of the within Warrant irrevocably
exercises the within Warrant for and purchases ______________________________
shares of Common Stock (or Other Securities) [SPECIFY] of CARDIOTECH
INTERNATIONAL, INC. and herewith makes payment therefor in the amount of $___,
all at the price, in the manner and on the terms and conditions specified in the
within Warrant, and requests that a certificate (or____________certificates in
denominations of________shares) for such shares hereby purchased be issued in
the name of and delivered to (choose one) (a) the undersigned or (b)_________,
whose address is __________________________________ and, if such shares shall
not include all the Warrant Shares issuable as provided in the within Warrant,
that a new Warrant of like tenor for the number of Warrant Shares not being
purchased hereunder be issued in the name of and delivered to (choose one) (a)
the undersigned or (b)________________ , whose address is ____________________.
Dated:___________ ____, _____
[ ]
By _____________________________
(Signature of Registered Holder)
NOTICE: The signature on this Notice of Exercise must correspond with the
name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatever.
-31-
35
FORM OF ASSIGNMENT
(To be executed only upon the assignment
of the within Warrant)
FOR VALUE RECEIVED, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto _____________________, whose address
is______________________, all of the rights of the undersigned under the within
Warrant, with respect to _________ shares of Common Stock (or Other Securities)
[SPECIFY] of CARDIOTECH INTERNATIONAL, INC. and, if such shares shall not
include all the Warrant Shares issuable as provided in the within Warrant, that
a new Warrant of like tenor for the number of Warrant Shares not being
transferred hereunder be issued in the name of and delivered to the undersigned,
and does hereby irrevocably constitute and appoint _______________ Attorney to
register such transfer on the books of CARDIOTECH INTERNATIONAL, INC. maintained
for the purpose, with full power of substitution in the premises.
Dated: ____________ ___, _____.
[ ]
By ______________________________
(Signature of Registered Holder)
NOTICE: The signature on this Assignment must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatever.
-32-