Exhibit 10.36
SEPTEMBER 9, 2000
CAMBRIDGE HEART, INC.
SUBSCRIPTION AGREEMENT
A minimum of 1,000,000 Shares (the "Minimum Offering") and
A maximum of 2,500,000 Shares (the "Maximum Offering")
To: Cambridge Heart, Inc.
0 Xxx Xxxx Xxxxx
Xxxxxxx, XX 00000
Attn.: Xxxxxxx Xxxxxx, President
Ladies and Gentlemen:
1. SUBSCRIPTION. Cambridge Heart, Inc., a Delaware corporation (the
"Company"), is offering shares of its common stock, $.001 par value per share
(the "Common Stock") in a private placement (the "Offering"), solely to
"Accredited Investors" (as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act of 1933, as amended (the "Act")), pursuant to the Term
Sheet, attached hereto as EXHIBIT A (the "Term Sheet"). Sunrise Securities
Corp., a Delaware corporation ("Sunrise"), is acting as placement agent for the
Offering. The undersigned hereby subscribes to purchase in the Offering the
number of shares of Common Stock indicated on the signature page to this
Subscription Agreement (the "Shares") for a purchase price of $3.50 per Share
(the "Share Price"). The undersigned will also receive a warrant in the form
attached hereto as EXHIBIT B, to purchase a number of shares of Common Stock
equal to 25% of the number of Shares purchased by it hereunder at an exercise
price per share of Common Stock of $3.875 (the "Investor Warrant" and together
with the Shares, the "Securities"). The cost of the Investor Warrant shall be
$0.10 per underlying share, which cost shall be an allocated cost included in
the $3.50 Share Price. The Offering shall, unless extended by mutual consent of
the Company and Sunrise, terminate on September 30, 2000 (the "Termination
Date"). Prior to the acceptance of this Subscription Agreement by the Company
and the occurrence of a Closing (as defined herein) in connection therewith, the
undersigned's execution of this Subscription Agreement will not constitute an
agreement between the undersigned and the Company. Notwithstanding anything
herein to the contrary, if the average of the closing sales prices of the Common
Stock for any seven consecutive trading day period prior to the Termination Date
exceeds $4.50, the Company shall have the right to refuse to sell any Shares
pursuant to the terms hereof.
2. DELIVERY OF FUNDS. On the date hereof, payment of a sum equal to the
product obtained by multiplying $3.50 by the number of Shares subscribed for
hereunder (the "Purchase Price") is being made by electronic wire transfer in
accordance with the following instructions:
Bank Name: The Chase Manhattan Bank
ABA #: 000000000
Credit: United States Trust Co. of NY
Account #: 000-0-000000
Further Credit: Sunrise/Cambridge Heart, Inc.
Account # 00000000
Attention: Xxxxx Xxxxx
or by delivery of a bank check or certified check made payable to "Cambridge
Heart, Inc. - Escrow Account." All checks should be delivered together with an
executed copy of this Subscription Agreement, to Sunrise, as follows:
Sunrise Securities Corp.
000 Xxxx 00xx Xxxxxx
00xx xxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxxx Xxxxxxx
3. CLOSINGS. The initial closing of the Offering (the "Initial Closing")
shall take place, on or prior to the Termination Date, at the offices of
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP, 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 ("RSPAB") on or about the third (3rd) business day
after Sunrise receives notice from the Company that the Company has accepted
subscriptions for a number of Shares equal to or greater than the Minimum
Offering (such date, the "Initial Closing Date"). Subsequent closings of the
Offering (each a "Subsequent Closing") shall take place, subsequent to the
Initial Closing Date and prior to the Termination Date, at the offices of RSPAB
on or about the third (3rd) business day after Sunrise receives notice from the
Company that the Company has accepted additional subscriptions for a number of
Shares up to the Maximum Offering (each such date, an "Additional Closing
Date"). The Initial Closing and any Additional Closing are sometimes
collectively referred to as a "Closing." The Initial Closing Date and any
Additional Closing Date are sometimes collectively referred to as a "Closing
Date."
Promptly after the Initial Closing Date (if this Subscription
Agreement is delivered and accepted after the Initial Closing Date, then after
the Subsequent Closing Date), the Company will deliver to the undersigned
certificates evidencing the Securities to be purchased by the undersigned,
registered in its name. As of the Initial Closing Date (if this Subscription
Agreement is delivered and accepted after the Initial Closing Date, then as of
the Subsequent Closing Date), the undersigned shall be entitled to vote all
-2-
of the Shares, to receive dividends, if any, and to obtain all of the rights
otherwise granted to the Company's stockholders. The name of each undersigned
shall be registered on the transfer books of the Company as the record owner of
the Securities purchased. If the Company has not received and accepted
subscriptions for a number of Shares equal to the Minimum Offering on or prior
to the Termination Date, no Securities will be sold pursuant to this
Subscription Agreement and the Purchase Price paid by the undersigned will be
returned to the undersigned without interest promptly after the Termination
Date.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. To induce the
undersigned to enter into this Agreement and to purchase the Securities, the
Company hereby represents and warrants to the undersigned the following:
(a) ORGANIZATION, STANDING, ETC. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to own or
lease its properties and to carry on its business as it is now being conducted.
The Company has the requisite corporate power and authority to issue the
Securities and to perform its obligations under this Subscription Agreement.
(b) VALID ISSUANCE. The Securities, when issued and delivered
against payment therefor pursuant to terms of this Subscription Agreement, will
be duly authorized, validly issued, fully paid and nonassessable. The shares of
Common Stock issuable upon exercise of the Investor Warrant (the "Investor
Warrant Shares" and together with the Shares, the "Underlying Shares"), when
issued upon exercise of the Investor Warrant, will be duly authorized, validly
issued, fully paid and nonassessable.
(c) CORPORATE ACTS AND PROCEEDINGS. This Subscription
Agreement and the Offering have been duly authorized by all necessary corporate
action on behalf the Company. This Subscription Agreement has been duly executed
and delivered by an authorized officer of the Company, is a valid and binding
agreement on the part of the Company and is enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors' rights generally. All corporate actions
necessary to effect the Offering and authorize, create, issue and deliver the
Securities have been taken by the Company.
(d) COMPLIANCE WITH APPLICABLE LAWS AND OTHER INSTRUMENTS.
Neither the execution or delivery of, nor the performance of or compliance with
this Subscription Agreement, the issuance of the Securities nor the consummation
of the transactions contemplated hereby will, with or without the giving of
notice or passage of time, result in any material breach of, or constitute a
material default under, or result in the imposition of any material lien or
encumbrance upon any asset or property of the Company pursuant to, any material
agreement or other instrument to which the Company is a party or by which it or
any of its properties, assets or rights is bound or affected, and will not
violate the Company's Certificate of Incorporation or Bylaws.
-3-
(e) SECURITIES LAWS. Based in part upon the representations of
the undersigned in Section 6 hereof, no consent, authorization, approval, permit
or order of or filing with any governmental or regulatory authority is required
under current laws and regulations in connection with the execution and delivery
of this Agreement or the offer, issuance, sale or delivery of the Securities,
other than (i) the filing of a Form D pursuant to Regulation D under the Act
with the Securities and Exchange Commission (the "Commission"), (ii) the filing,
if required, of any notice with any state whose laws require such filing, (iii)
the qualification thereof, if required, under other applicable state laws, which
qualification has been or will be effected as a condition of the Offering and
(iv) the listing of the Underlying Shares on the Nasdaq National Market. Under
the circumstances contemplated by this Subscription Agreement, the offer,
issuance, sale and delivery of the Securities will not, under current laws and
regulations, require compliance with the prospectus delivery or registration
requirements in the Act.
(f) CAPITAL STOCK. The authorized and issued capital stock of
the Company as of the Initial Closing Date is correctly set forth in the Term
Sheet. There are no outstanding subscriptions, options, warrants, calls,
contracts, demands, commitments, convertible securities or other agreements or
arrangements of any character or nature whatever, other than in connection with
the Offering, pursuant to which the Company is obligated to issue any securities
of any kind representing an ownership interest in the Company. Except as
disclosed in the SEC Filings (as defined herein) and the Term Sheet, neither the
offer nor the issuance or sale of the Securities constitutes an event under any
anti-dilution provisions of any securities issued (or issuable pursuant to
outstanding rights, warrants or options) by the Company or any agreements with
respect to the issuance of securities by the Company, which will either increase
the number of securities issuable pursuant to such provisions or decrease the
consideration per share to be received by the Company pursuant to such
provisions. As of the date hereof, except as disclosed in the SEC Filings, no
holder of any securities of the Company is entitled to any preemptive or similar
rights to purchase any securities of the Company in connection with the
Offering.
(g) INVESTOR PACKAGE. The Company has furnished to the
undersigned an investor package (the "Investor Package") consisting, among other
things, of the Company's (i) Form 10-K for the fiscal year ended December 31,
1999, (ii) 1999 Annual Report and (iii) quarterly report on Form 10-Q for the
quarter ended March 31, 2000 (together with any and all other filings
effectuated by the Company with the Commission in 2000, collectively, the "SEC
filings") and a copy of the Term Sheet. The SEC Filings are also available to
the undersigned through the XXXXX Internet web site of the Commission. As of
their respective filing dates, the SEC Filings complied in all material respects
with the applicable requirements of the Exchange Act of 1934, as amended (the
"Exchange Act"). The Investor Package and the SEC Filings do not as of their
respective dates contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading.
(h) REPRESENTATIONS. The Company certifies that the
representations set forth herein concerning the Company are true, correct and
complete as of the date hereof, shall be true and accurate as of the date of the
acceptance hereof by the Company and shall survive thereafter (other than
-4-
representations and warranties which relate to a specific date, which
representations and warranties shall be true as of such date).
5. TRANSFER RESTRICTIONS.
(a) The undersigned realizes that the Underlying Shares are
not registered under the Act or any foreign or state securities laws. The
undersigned agrees that the Underlying Shares will not be sold, offered for
sale, pledged, hypothecated or otherwise transferred (collectively, "Transfer"),
except in compliance with the Act and applicable foreign and state securities
laws. The undersigned understands that he can only Transfer the Underlying
Shares pursuant to registration under the Act or pursuant to an exemption
therefrom. The undersigned understands that Transfer of the Underlying Shares
may require in certain jurisdictions specific approval by the appropriate
governmental agency or commission in such jurisdiction. The undersigned has been
advised that, except as set forth in Section 7 hereof, the Company has no
obligation, and does not intend, to cause the Underlying Shares to be registered
under the Act or the securities law of any other jurisdiction or to comply with
the requirements for any resale exemption under the Act, including but not
limited to, those provided by Rule 144 and Rule 144A promulgated under the Act,
or under the securities law of any other jurisdiction.
(b) To enable the Company to enforce the transfer restrictions
contained in Section 5(a) hereof, the undersigned hereby consents to the placing
of the following legend upon, and stop-transfer orders with the transfer agent
of the Common Stock with respect to, the Underlying Shares:
"The securities represented hereby have not been
registered under the Securities Act of 1933, as amended or any
state securities laws and neither the securities nor any
interest therein may be offered, sold, transferred, pledged or
otherwise disposed of except pursuant to an effective
registration statement under such Act or pursuant to an
available exemption from, or in a transaction not subject to,
the registration requirements of the securities act and in
accordance with applicable state securities laws."
6. REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED. To induce
the Company to accept the undersigned's subscription, the undersigned hereby
represents and warrants to the Company that:
(a) the undersigned, if an individual, has reached the age of
majority in the jurisdiction in which he resides, is a bona fide resident of the
jurisdiction contained in the address set forth on the signature page of this
Subscription Agreement, is legally competent to execute this Subscription
Agreement, does not intend to change residence to another jurisdiction;
-5-
(b) the undersigned, if an entity, is duly authorized to
execute this Subscription Agreement and this Subscription Agreement, when
executed and delivered by the undersigned, will constitute a legal, valid and
binding obligation enforceable against the undersigned in accordance with its
terms; and the execution, delivery and performance of this Subscription
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all requisite corporate or other necessary action on the part
of the undersigned;
(c) the Securities subscribed for hereby are being acquired by
the undersigned for investment purposes only, for the account of the undersigned
and not with the view to any resale or distribution thereof except as permitted
under Section 7 hereof, and the undersigned is not participating, directly or
indirectly, in a distribution of such Securities and will not take, or cause to
be taken, any action that would cause the undersigned to be deemed an
"underwriter" of such Securities as defined in Section 2(11) of the Act;
(d) the undersigned has had access to all materials, books,
records, documents and information relating to the Company which the undersigned
has requested, including the SEC Filings and the Term Sheet and has been able to
verify the accuracy of the information contained therein;
(e) the undersigned acknowledges and understands that
investment in the Securities involves a high degree of risk, including, without
limitation, the risks set forth in the SEC Filings under the captions "Certain
Factors That May Affect Future Operating Results," "Factors Which May Affect
Future Results" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations;"
(f) the undersigned acknowledges that the undersigned has been
offered an opportunity to ask questions of, and receive answers from, officers
of the Company concerning all material aspects of the Company and its business
and the Offering, and that any request for such information has been fully
complied with to the extent the Company possesses such information or can
acquire it without unreasonable effort or expense;
(g) the undersigned has such knowledge and experience in
financial and business matters that the undersigned is capable of evaluating the
merits and risks of an investment in the Company and can afford a complete loss
of its investment in the Company;
(h) the undersigned has, in connection with its decision to
purchase the Securities, relied solely upon the SEC Filings and the Term Sheet.
The undersigned has not relied upon any representations or other information
(whether oral or written) from the Company, Sunrise or any of their respective
agents other than as set forth herein and no oral or written representations
have been made or oral or written information furnished to the undersigned or
its advisors, if any, in connection with the offering of the Securities which
were in any way inconsistent with the SEC Filings and the Term Sheet;
-6-
(i) the undersigned represents and warrants to and covenants
with the Company that the undersigned has not engaged and will not engage in any
sales of the Underlying Shares, including a short sale covered by the Underlying
Shares, prior to the effectiveness of the Resale Registration Statement (as
defined in Section 7), except to the extent that any such short sale is fully
covered by shares of Common Stock of the Company other than the Underlying
Shares;
(j) the undersigned recognizes that neither the Commission nor
any federal, state or foreign governmental agency has passed upon or endorsed
the merits of the issuance of the Securities or made any finding or
determination as to the fairness of this Offering;
(k) if the undersigned is purchasing the Securities subscribed
for hereby in a representative or fiduciary capacity, the representations and
warranties contained herein shall be deemed to have been made on behalf of the
person or persons for whom such Securities are being purchased;
(l) the undersigned has not entered into any agreement to pay
commissions to any persons with respect to the purchase or sale of the
Securities;
(m) the undersigned acknowledges that, with respect to the
sale of the Securities by the Company to the undersigned the Company will pay to
Sunrise (i) a commission of 6.0% of the Purchase Price paid by the undersigned,
at the option of Sunrise, in cash or shares of Common Stock valued at the Share
Price less 6% (such shares of Common Stock, the "Sunrise Shares"), (ii) an
expense allowance of 1.15% of the Purchase Price paid by the undersigned and
(iii) five-year warrants to purchase, at an exercise price equal to $4.20, that
number of shares of Common Stock equal to 6% of the number of Shares being
purchased by the undersigned hereunder including any Sunrise Shares (such shares
of Common Stock, the "Sunrise Warrant Shares" and together with the Investor
Warrant Shares, the "Warrant Shares");
(n) all information which the undersigned has provided to the
Company concerning its financial position is true, correct and complete as the
date set forth below, and if there should be any change in such information
prior to the undersigned's acceptance as a security holder of the Company, the
undersigned will immediately provide such information to the Company and will
promptly send confirmation of such information to the Company and Sunrise;
(o) the undersigned is not subscribing for the Securities as a
result of or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio or presented at any seminar or meeting to which the
public was invited;
(p) the undersigned is an "Accredited Investor" as that term
is defined in Rule 501(a) of Regulation D promulgated under the Act.
Specifically the undersigned is (check appropriate item(s)):
-7-
/ / (i) a bank as defined in Section 3(a)(2) of the Act, or a savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the
Act whether acting in its individual or fiduciary capacity; a broker or dealer
registered pursuant to Section 15 of the Exchange Act; an insurance company as
defined in Section 2(13) of the Act; an investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act; a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) of (d) of the Small
Business Investment Act of 1958; a plan established and maintained by a state,
its political subdivisions or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has total
assets in excess of $5,000,000, an employee benefit plan within the meaning of
the Employment Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association, insurance company, or
registered investment advisor, or if the employee benefit plan has total assets
in excess of $5,000,000, or if a self-directed plan, with investment decisions
made solely by persons that are Accredited Investors;
/ / (ii) a private business development company as defined in Section
202(a)(22) of the investment Advisers Act of 1940;
/ / (iii) an organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring Shares,
with total assets in excess of $5,000,000;
/ / (iv) a director or executive officer of the Company;
/ / (v) a natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his or her purchase exceeds
$1,000,000;
/ / (vi) a natural person who had an individual income (not including his
or her spouse's income) in excess of $200,000 in 1998 and 1999 or joint income
with his or her spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching such income level in 2000;
/ / (vii) a trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring Shares, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii); or
-8-
/ / (viii) an entity in which all of the equity owners are Accredited
Investors. (If this alternative is checked, the undersigned must identify each
equity owner and provide statements signed by each demonstrating how each is
qualified as an Accredited Investor.)
(q) the undersigned certifies that the representations set
forth herein concerning the undersigned are true, correct and complete as of the
date hereof, shall be true and accurate as of the date of the acceptance hereof
by the Company and shall survive thereafter.
(r) the undersigned understands that this subscription may be
accepted or rejected, in whole or in part, either by the Company or Sunrise in
consultation with the Company.
-9-
7. REGISTRATION OF SHARES UNDER THE ACT.
(a) By accepting this subscription, the Company agrees that it
shall (i) not later than 30 business days after the final Closing Date, file a
registration statement or amend an existing effective registration statement (in
either case, the "Resale Registration Statement") with the Commission to
register under the Act the resale by the undersigned, all other purchasers of
the Securities in the Offering and Sunrise, with respect to the Sunrise Warrant
Shares and the Sunrise Shares issued to it pursuant to Section 6(m)
(collectively, the "Holders"), of (A) the Shares, (B) the Warrant Shares and (C)
the Sunrise Shares (the items in (A)-(C) are sometimes collectively referred to
as the "Registrable Securities"), (ii) use its reasonable best efforts to cause
the Resale Registration Statement to become effective under the Act as promptly
as practicable, (iii) after the Resale Registration Statement is declared
effective under the Act, furnish the undersigned with such number of copies of
the final prospectus included in the Resale Registration Statement (the
"Prospectus") as the Holders may reasonably request to facilitate the resale of
Underlying Shares, and (iv) use its reasonable best efforts to cause such Resale
Registration Statement to remain effective and current until such time as the
undersigned becomes eligible to resell the Underlying Shares pursuant to Rule
144(k) promulgated under the Act.
(b) The Company will (i) prepare and file with the Commission
such amendments and Prospectus supplements, including post-effective amendments
to the Resale Registration Statement, as may be necessary or appropriate, and
use its reasonable best efforts to have such post-effective amendments declared
effective as promptly as practicable, (ii) cause the Prospectus to be
supplemented by any Prospectus supplement, and as so supplemented, to be filed
with the Commission, and (iii) promptly notify the Holders when a Prospectus and
any Prospectus supplement or post-effective amendment must be filed or has been
filed and, with respect to any post-effective amendment, when the same has
become effective.
(c) In connection with the Resale Registration Statement, the
undersigned shall furnish the Company such information relating to the
undersigned's ownership of Securities as the Company shall reasonably request.
(d) In connection with the Resale Registration Statement, the
Company shall cause the Underlying Shares to be registered or qualified for sale
under the securities or "blue sky" laws of such jurisdictions as the holders of
at least a majority of all such registered Underlying Shares and/or as Sunrise
may reasonably request, PROVIDED, that the Company shall not be required in
connection therewith to qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified other than as to matters and transactions
related to the Prospectus, the Resale Registration Statement, any preliminary
prospectus or the offering or sale of the Underlying Shares, in any jurisdiction
in which it is not now so subject.
(e) The Company shall notify the Holders, at any time when a
prospectus relating to any such Registrable Securities covered by the Resale
Registration Statement is required to be delivered under the Act, of the
Company's becoming aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state any material
-10-
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, and, subject to
the provisions of Section 7(f) below, promptly prepare and furnish to the
Holders a reasonable number of copies of a prospectus supplemented or amended so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(f) For a period not exceeding either (i) ten (10) consecutive
trading days in any twelve (12) month period or (ii) an aggregate of twenty (20)
trading days in any twelve (12) month period (each, a "Delay Period"), the
Company may delay the filing with the Commission, pursuant to Section 7(e)
hereof, of an amendment or supplement to a prospectus containing material
non-public information concerning the Company, the disclosure of which, at such
time, would, in the good faith opinion of the Board of Directors of the Company,
materially interfere with any material financing, corporate reorganization or
other material transaction involving the Company (a "Permitted Delay"),
PROVIDED, that, upon the occurrence of each Permitted Delay, the Company shall
promptly (a) notify each Holder in writing of the existence of (but in no event,
without the prior written consent of such Holder, shall the Company disclose to
such Holder any of the facts or circumstances regarding) material non-public
information giving rise to a Permitted Delay, (b) advise each Holder in writing
to cease all sales of Registrable Securities under the Resale Registration
Statement until the end of the Permitted Delay, and (c) take any and all actions
necessary to enable each Holder to resume sales of the Registrable Securities
under the Resale Registration Statement immediately upon the end of the
applicable Delay Period.
(g) The Company shall pay all Registration Expenses (as
defined below) incurred in connection with a registration of Registrable
Securities, whether or not such registration statement shall become effective,
PROVIDED, that the Holders shall pay all commissions and transfer taxes, and its
own counsel and accounting fees, if any, relating to the sale or disposition of
its Registrable Securities pursuant to a registration statement. As used herein,
"Registration Expenses" means any and all reasonable and customary expenses
incident to performance of or compliance with the registration rights set forth
herein, including, without limitation, (i) all SEC and stock exchange filing
fees, (ii) all fees and expenses of complying with state securities or blue sky
laws, (iii) all printing, messenger and delivery expenses, and (iv) the fees and
disbursements of counsel for the Company and the Company's independent public
accountants.
(h) The Company acknowledges that there is no adequate remedy
at law for failure by it to comply with the provisions of this Paragraph 6 and
that such failure would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Paragraph 6 may be specifically
enforced. In the event that the Company shall fail to file the Resale
Registration Statement when required pursuant to Paragraph 6(a) above or to keep
such Resale Registration Statement effective as provided in this Paragraph or
otherwise fails to comply with its obligations and agreements in this Paragraph
6, then, in addition to any other rights or remedies Sellers may have at law or
in equity, including without limitation, the right of rescission, the Company
shall indemnify and hold harmless the Holders from and
-11-
against any and all manner or loss which they may incur as a result of such
failure. In addition, the Company shall also reimburse the Holders for any and
all reasonable legal fees and expenses incurred by them in enforcing their
rights pursuant to this Paragraph 6, regardless of whether any litigation was
commenced, PROVIDED, that the Company shall not be liable for the fees and
expenses of more than one law firm, which firm shall be designated by Sunrise
and shall be reasonably acceptable to the Company.
(i) In the event that the Company shall fail to cause the
Resale Registration Statement to be declared effective within 90 days after the
final Closing Date (the "Record Date"), the Company shall pay to the holders of
the Shares, as liquidated damages (and not as a penalty) therefor, on the Record
Date and each monthly anniversary thereof until the Resale Registration
Statement is declared effective, a cash payment equal to (i) 1% of the product
obtained by multiplying the Share Price and the Shares held by such holder for
each 30 days or part thereof that effectiveness is delayed beyond the Record
Date and up to and including the 150th day after the final Closing Date and (ii)
2% of the product obtained by multiplying the Share Price and the Shares held by
such holder for each 30 days or part thereof that effectiveness is delayed
beyond 150 days after the final Closing Date. If the Company fails to pay any
cash payment due hereunder in full pursuant to this Section, the Company will
pay interest thereon at a rate of 15% per annum or such lesser maximum amount
that is permitted to be paid by applicable law, accruing daily from the date due
until such amount, plus all such interest thereon, is paid in full.
(j) In the event that the Company shall fail to cause the
Resale Registration Statement to be declared effective on or prior to the Record
Date, the Company shall pay to the holders of the Sunrise Shares, as liquidated
damages (and not as a penalty) therefor, on the Record Date and each monthly
anniversary thereof until the Resale Registration Statement is declared
effective, a cash payment equal to (i) 1% of the product obtained by multiplying
3.26 and the Sunrise Shares held by such holder for each 30 days or part thereof
that effectiveness is delayed beyond the Record Date and up to and including the
150th day after the final Closing Date and (ii) 2% of the product obtained by
multiplying 3.26 and the Sunrise Shares held by such holder for each 30 days or
part thereof that effectiveness is delayed beyond 150 days after the final
Closing Date. If the Company fails to pay any cash payment due hereunder in full
pursuant to this Section, the Company will pay interest thereon at a rate of 15%
per annum or such lesser maximum amount that is permitted to be paid by
applicable law, accruing daily from the date due until such amount, plus all
such interest thereon, is paid in full.
8. INDEMNIFICATION.
(a) The undersigned understands the meaning and legal
consequences of the representations and warranties made by the undersigned in
this Subscription Agreement, and agrees to indemnify and hold harmless the
Company and each of the Company's directors, officers, stockholders, employees,
counsel, agents, successors and assignees from and against any and all loss,
damage, liability or expenses (including, without limitation, attorneys' fees),
as and when incurred, due to or arising out of (in such case in whole or in
part) any breach of any representation or warranty made by the undersigned set
forth herein or in any other agreement or other document furnished by the
undersigned to any of the
-12-
foregoing in connection with the Offering, any failure by the undersigned to
fulfill any of its covenants or agreements set forth herein, or arising out of
the resale or distribution by the undersigned of the Underlying Shares or any
portion thereof in violation of the Act or any applicable foreign or state
securities or "blue sky" law.
(b) The Company understands the meaning and legal consequences
of the representations and warranties made by it in this Subscription Agreement,
and agrees to indemnify and hold harmless the undersigned and each of the
undersigned's directors, officers, stockholders, employees, counsel, agents,
successors and assigns from and against any and all loss, damage, liability or
expense (including, without imitation, attorneys' fees), as and when incurred,
due to or arising out of (in each case in whole or in part) any breach of any
representation or warranty made by the Company set forth herein, or any failure
by the Company to fulfill any of its covenants or agreements set forth herein.
(c) To the maximum extent permitted by law, the Company will
indemnify and hold harmless each Holder, the directors, if any, of such Holder,
the officers, if any, of such Holder, and each person, if any, who controls such
Holder within the meaning of the Act or the Exchange Act, against any losses,
claims, damages, expenses or liabilities to which any of them may become
subject, under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, expenses or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
of the following statements, omissions or violation (collectively, a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in the Resale Registration Statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
or (iii) any violation or alleged violation by the Company of the Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Act, the Exchange Act or any state securities law; and the Company
will reimburse the Holders and each such controlling person, promptly as such
expenses are incurred, for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding.
(d) To the maximum extent permitted by law, each Holder,
severally and not jointly, will indemnify and hold harmless, to the same extent
and in the same manner set forth in Section 8(c), the Company, each of its
directors and officers who have signed the Resale Registration Statement, and
each person, if any, who controls the Company within the meaning of the Act or
the Exchange Act, against any losses, claims, damages or liabilities to which
any of them may become subject, under the Act, the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened in respect thereof) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with the Resale Registration Statement; and such Holder will reimburse such
persons for any legal or other expenses reasonably
-13-
incurred by any of them in connection with investigating or defending any such
loss, claim, damage, liability or action.
(e) With respect to the indemnification set forth in Sections
7(c) or (d) above, to the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under said Sections 7(c) or (d) to the extent permitted by law; provided that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in said
Sections 7(c) or (d),(ii) no party guilty of fraudulent misrepresentation
(within the meaning of Section 11 of the Act) shall be entitled to contribution
from any party who was not guilty of such fraudulent misrepresentation, and
(iii) contribution from any Holder shall be limited in amount to the net amount
of proceeds received by such Holder from the sale of Shares under the Resale
Registration Statement.
9. [Intentionally left blank]
10. FURTHER DOCUMENTS. The undersigned agrees that it will execute such
other documents as may be necessary in connection with the transactions
contemplated hereby.
11. MODIFICATION. Neither this Subscription Agreement nor any
provisions hereof shall be waived, modified, discharged or terminated except by
an instrument in writing signed by the party against whom any such waiver,
modification, discharge or termination is sought.
12. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service and delivered against receipt to the party
to whom it is to be given, (i) if to the Company, at the address set forth on
the first page hereof, with a copy to Xxxxxx X. Xxxxxx, Esq. at Xxxx and Xxxx
XXX, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, (ii) if to the undersigned, at its
address set forth on the signature page hereto, or (iii) in either case, to such
other address as the party shall have furnished in writing in accordance with
the provisions of this Section 12. Notice to the estate of any party shall be
sufficient if addressed to the party as provided in Section 12. Any notice or
other communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof. Any notice given by other
means permitted by this Section 12 shall be deemed given at the time of receipt
thereof.
13. COUNTERPARTS. This Subscription Agreement may be executed through
the execution of separate signature pages or in any number of counterparts, and
each such counterpart shall, for all purposes, constitute one agreement binding
on all parties, notwithstanding that all parties are not signatories to the same
counterpart.
-14-
14. ENTIRE AGREEMENT. This Subscription Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and there are
no representations, covenants or other agreements except as stated or referred
to herein.
15. SEVERABILITY. Each provision of this Subscription Agreements is
intended to be severable from every other provision, and the invalidity or
illegality of any portion hereof shall not affect the validity or legality of
the remainder hereof.
16. ASSIGNABILITY. This Subscription Agreement is not transferable or
assignable by the undersigned.
17. APPLICABLE LAW. This Subscription Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
giving effect to conflict of laws.
18. CHOICE OF JURISDICTION. Any action or proceeding arising directly,
indirectly or otherwise, in connection with, out of or from this Subscription
Agreement, any breach hereof or any transaction covered hereby shall be resolved
within New York, New York. Accordingly, the parties consent and submit to the
jurisdiction of the United States federal and state courts located within New
York, New York.
19. TAXPAYER IDENTIFICATION NUMBER. The undersigned verifies under
penalties of perjury that any Taxpayer Identification Number or Social Security
Number shown on the signature page hereto is true, correct and complete.
20. PRONOUNS. Any personal pronoun shall be considered to mean the
corresponding masculine, feminine or neuter personal pronoun, as the context
requires.
21. NO REPRESENTATIONS AND WARRANTIES BY SUNRISE. The undersigned and
the Company agree and acknowledge that Sunrise is not making any representations
or warranties on behalf of any of the parties hereto.
-15-
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement this __ day of ____________ 2000.
Amount of Shares Purchased: __________________
INDIVIDUAL SUBSCRIBER: ENTITY SUBSCRIBER:
__________________________________ ________________________________
(Signature of Subscriber) (Print Name of Subscriber)
__________________________________ By:_____________________________
(Typed or Printed Name) Name:___________________________
Title:__________________________
__________________________________ ________________________________
(Residence Address) (Address)
__________________________________ ________________________________
(City, State and Zip Code) (City, State and Zip Code)
__________________________________ ________________________________
(Telephone Number) (Telephone Number)
__________________________________ ________________________________
(Telecopier Number) (Telecopier Number)
__________________________________ ________________________________
(Tax I.D. or Social Security Number) (Tax I.D. or Social Security
Number)
ACCEPTED:
CAMBRIDGE HEART, INC. FOR ENTITIES DESIRING THAT
By:_______________________________ CERTIFICATES FOR SHARES BE
Name:_____________________________ DELIVERED TO AN ADDRESS OTHER THAN
Title:____________________________ THAT SET FORTH ABOVE, SET
Dated:____________________________ FOR THE DELIVERY ADDRESS:
_____________________________
(Address)
_____________________________
-16-
(City, State and Zip Code)
EXHIBIT A
CAMBRIDGE HEART, INC.
AUGUST 2000 PRIVATE PLACEMENT
SECOND AMENDED TERM SHEET
SEPTEMBER 6, 2000
Private placement This offering (the "Offering") is
being made exclusively to
institutions and high-net worth
individuals that meet the definition
of "Accredited Investor" as set forth
in Rule 501(a) of Regulation D under
the Securities Act of 1933, as
amended (the "Act").
Amount of financing $3,500,000 to $8,750,000.
Securities offered 1,000,000 to 2,500,000 shares (the
"Shares") of common stock, $.001 par
value (the "Common Stock"), of
Cambridge Heart, Inc. (the
"Company").
Each investor will also receive, a
warrant to purchase, for a period of
five years from the issuance date
thereof, a number of shares of Common
Stock equal to 25% of the number of
Shares purchased by it in the
Offering at an exercise price per
share of Common Stock of $3.875
(collectively, the "Investor
Warrants"). The cost of the Investor
Warrant shall be $0.10 per underlying
share, which cost shall be an
allocated cost included in the $3.50
Sales Price described below. The
Investor Warrants shall contain
customary anti-dilution provisions.
The Investor Warrants shall not be
exercisable for a period of 30 days
from the date of closing.
Price per Share $3.50 (the "Sales Price").
Pre-Offering - Shares of Common 14,646,387 shares of Common Stock.
Stock outstanding
Pre-Offering - Warrants and 1,694,850 shares of Common Stock
Options outstanding underlying stock options.
594,945 shares of Common Stock
underlying warrants.
Escrow Prior to closing, funds shall remain
in a non-interest bearing escrow
account at US Trust Company.
Risk factors Investment in the Shares involves a
high degree of risk including, but
not limited to, those risks set forth
in the Company's Quarterly Report on
Form 10-Q for the quarterly period
ended March 31, 2000. The Shares have
not been registered under the Act or
any foreign or state securities laws.
The Shares may not be sold until
registered under the Act in
accordance with the registration
rights described below or pursuant to
an exemption from registration.
Accordingly, the Shares will be
restricted securities which an
investor may be required to hold for
an indeterminable period of time.
Placement agent Sunrise Securities Corp. ("Sunrise")
is acting as exclusive placement
agent. Sunrise shall be paid a
commission of 6% of the gross sales
price of the Shares sold to investors
other than EGS Associates, L.P.
Sunrise may elect to receive all or
any part of its commission in shares
of Common Stock (the "Commission
Shares") valued at the Sales Price
less the 6% commission mentioned
above (the "Sunrise Price"). In
addition, Sunrise shall be issued
warrants to purchase a number of
shares of Common Stock equal to 6% of
the Shares sold to investors other
than EGS Associates, L.P. inclusive
of any Commission Shares (the
"Sunrise Warrants" and together with
the Investor Warrants, the
"Warrants"). The term of the Sunrise
Warrants is five years from the
issuance thereof and the exercise
price per share is $4.20. Employees
of the Placement Agent who are
"Accredited Investors" may purchase
Shares for their own personal account
on the same terms and conditions as
other investors in the Offering. Any
such purchases shall count towards
the minimum and maximum offerings,
respectively.
Expenses Sunrise shall also receive an expense
allowance of 1.15% of the gross sales
price of the Shares sold to investors
other than EGS Associates, L.P. to
cover expenses incurred by Sunrise in
connection with the Offering.
Registration rights The Company shall, at its expense,
(i) not later than 30 business days
after the final closing of the
Offering (the "Filing Deadline") file
a registration statement (the
"Registration Statement") with the
Securities and Exchange Commission
("Commission") to
register under the Act the resale of
the Shares and shares of Common Stock
underlying the Warrants and
Commission Shares, if any
(collectively, "Registrable Shares"),
by the holders thereof, (ii) use its
reasonable best efforts to cause the
Registration Statement to become
effective under the Act as promptly
as practicable after the filing
thereof, (iii) after the Registration
Statement is declared effective under
the Act, furnish subscribers with
such number of copies of the
prospectus included in the
Registration Statement as the holders
may reasonably request to facilitate
the resale of the Registrable Shares,
and (iv) use its reasonable best
efforts to cause such Registration
Statement to remain effective,
subject to customary black-out
periods, until such time as the
subscribers become eligible to resell
the Registrable Shares pursuant to
Rule 144(k) under the Act. In the
event that the Company shall fail to
cause the Registration Statement to
be declared effective within 90 days
after the final closing of the
Offering, the Company shall pay to
the holders of the Shares and
Commission Shares, as compensation
therefor, a cash payment equal to (i)
1% of the product obtained by
multiplying (A) in the case of the
Shares, the Sales Price and the
Shares held by such holder, or (B) in
the case of the Commission Shares,
the Sunrise Price and the Commission
Shares held by such holder, in both
cases, for each 30 days or part
thereof that effectiveness is delayed
beyond 90 days after the final
closing of the Offering and up to 150
days after the final closing of the
Offering and (ii) 2% of the product
obtained by multiplying (A) in the
case of the Shares, the Sales Price
and the Shares held by such holder,
or (B) in the case of the Commission
Shares, the Sunrise Price and the
Commission Shares held by such
holder, in both cases, for each 30
days or part thereof effectiveness is
delayed beyond 150 days after the
final closing of the Offering.
Lock-up Prior to October 20, 2000, the
Company shall not sell or offer to
sell any of its securities, except
pursuant to the Company's stock
option plan, without the written
consent of Sunrise, which consent
shall not be unreasonably withheld.
All of the Company's officers and
directors shall agree to not sell or
transfer their shares of Common Stock
for a period of 180 days following
the final closing of the Offering,
subject to an earlier release for any
former director who is no longer an
affiliate of the Company.
Issues relating to a Company The Company discovered the existence
Patent of U.S. Patent No. 5,921,940 issued
by the Patent and Trademark Office on
July
13, 1999 and assigned to Georgetown
University (the "940 Patent"). The
940 Patent includes claims which are
similar or identical to claims of the
Company's U.S. Patent No. 5,570,696.
The Company has received an opinion
of its patent counsel, Fish &
Xxxxxxxxxx, PC, that the 940 Patent
is invalid and should not have been
issued by the Patent and Trademark
Office.
Closings The first closing will occur
following the completion of financing
for $3,500,000 and one or more
closings may occur on identical terms
until the earlier of the completion
of financing for an aggregate of
$8,750,000 or the Termination Date.
The Placement Agent reserves the
right to reject or reduce any
subscription for the purchase of
Shares in order to ensure compliance
with the limitation on the issuance
of securities at a price below the
market value of the stock to 20% of
the outstanding stock pursuant to
Rule 4460(i)(1) of the Nasdaq Stock
Market.
If the average of the closing sales
prices of the Common Stock for any
seven consecutive trading day period
prior to the Termination Date exceeds
$4.50, the Company shall have the
right to refuse to sell any Shares
pursuant to the terms hereof.
Termination of Offering The Offering will terminate on
September 30, 2000 unless extended by
mutual agreement of the Company and
Sunrise (the "Termination Date"). On
the Termination Date, any funds
remaining in escrow that have not
been closed upon shall be promptly
returned to subscribers, without
interest thereon.
EXHIBIT B
Warrant No. ____
Warrant to Purchase ______ Shares
COMMON STOCK PURCHASE WARRANT
To Purchase Shares of Common Stock (par value $0.001 per share)
of
CAMBRIDGE HEART, INC.
(Delaware corporation)
Expires September __, 2005
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
VOID AFTER 8:00 P.M. NEW YORK TIME, ON SEPTEMBER [ ], 2005
CAMBRIDGE HEART, INC.
Warrant to Purchase Shares of Common Stock
THIS CERTIFIES that, for good and valuable consideration
received, [ ] (the "HOLDER"), is entitled to subscribe for and purchase from
CAMBRIDGE HEART, INC., a Delaware corporation (the "COMPANY"), upon the terms
and conditions set forth herein, at any time or from time to time after
September __, 2000, until 5:00 P.M. New York City time on September __, 2005
(the "EXPIRATION Date"), all or any portion of [ ] shares (the "WARRANT SHARES")
of common stock of the Company, par value $0.001 per share (the "Common Stock"),
subject to adjustment as provided herein, at a price of $3.875 per share,
subject to adjustment as provided herein (the "EXERCISE PRICE"). This Warrant
shall not be redeemable by the Company. This Warrant may be sold, transferred,
assigned or hypothecated at any time and the term the "HOLDER" as used herein
shall include any transferee to whom this Warrant has been transferred.
1. REGISTRATION OF WARRANT. The Company shall register this
Warrant, upon records to be maintained by the Company for that purpose (the
"Warrant Register"), in the name of the record Holder hereof from time to time.
The Company may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any distribution
to the Holder, and for all other purposes, and the Company shall not be affected
by notice to the contrary.
2. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) The Company shall register the transfer of any portion
of this Warrant in the Warrant Register, upon surrender of this Warrant, with
the Form of Assignment attached hereto duly completed and signed, to the Company
at the office specified in or pursuant to Section 3(b). Upon any such
registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a "New Warrant"),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a holder
of a Warrant.
(b) This Warrant is exchangeable, upon the surrender hereof
by the Holder to the office of the Company specified in or pursuant to Section
3(b) for one or more New Warrants, evidencing in the aggregate the right to
purchase the number of Warrant Shares which may then be purchased hereunder. Any
such New Warrant will be dated the date of such exchange.
3. DURATION, REDEMPTION AND EXERCISE OF WARRANTS.
(a) This Warrant shall be exercisable by the registered
Holder on any business day before 8:00 P.M., New York City time, at any time and
from time to time on or after the 30th day following the date hereof to and
including the Expiration Date. At 8:00 P.M., New York City time on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value. Prior to the Expiration Date and other than
pursuant to Section 3(d), the Company may not call or otherwise redeem this
Warrant without the prior written consent of the Holder.
(b) Subject to Sections 2(b), 9 and 10, upon surrender of
this Warrant, with the Form of Election to Purchase attached hereto duly
completed and signed, to the Company at its address for notice set forth in
Section 14 and upon payment of the Exercise Price multiplied by the number of
Warrant Shares that the Holder intends to purchase hereunder, in the manner
provided hereunder, all as specified by the Holder in the Form of Election to
Purchase, the Company shall promptly (but in no event later than three (3)
business days after the Date of Exercise (as defined herein)) issue or cause to
be issued and cause to be delivered to or upon the written order of the Holder
and in such name or names as the Holder may designate, a certificate for the
Warrant Shares issuable upon such exercise. Any person so designated by the
Holder to receive Warrant Shares shall be deemed to have become holder of record
of such Warrant Shares as of the Date of Exercise of this Warrant.
A "Date of Exercise" means the date on which the Company
shall have received (i) this Warrant (or any New Warrant, as applicable), with
the Form of Election to Purchase attached hereto (or attached to such New
Warrant) appropriately completed and duly signed, and (ii) payment of the
Exercise Price for the number of Warrant Shares so indicated by the holder
hereof to be purchased.
(c) This Warrant shall be exercisable, either in its
entirety or, from time to time, for a portion of the number of Warrant Shares.
If less than all of the Warrant Shares which may be purchased under this Warrant
are exercised at any time, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares for which no exercise has been evidenced by this Warrant.
4. RESERVATION OF SHARES. The Company covenants that it will
at all times reserve and keep available out of the aggregate of its authorized
but unissued Common Stock, solely for the purpose of enabling it to issue
Warrant Shares upon exercise of this Warrant as herein provided, the number of
Warrant Shares which are then issuable and deliverable upon the exercise of this
entire Warrant, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holder (taking into account the
adjustments and restrictions of Section 5). The Company covenants that all
Warrant Shares that shall be so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable
5. CERTAIN EXERCISE PRICE ADJUSTMENTS. Subject to the
provisions of this Section 5, the Exercise Price in effect from time to time
shall be subject to adjustment, as follows:
-2-
(a) In case the Company shall at any time after the date
hereof (i) declare a dividend or make a distribution on the outstanding shares
of Common Stock payable in shares of its capital stock or securities convertible
into or exchangeable for capital stock, (ii) subdivide the outstanding shares of
Common Stock into a smaller number of shares, (iii) combine the outstanding
shares of Common Stock into a larger number of shares, or (iv) issue any shares
by reclassification of the shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value),
THEN, in each case, the Exercise Price in effect, and the number of Warrant
Shares issuable hereunder at the time of the record date for such dividend or at
the effective date of such subdivision, combination or reclassification, shall
be proportionately adjusted so that the Holder, after such time, shall be
entitled to receive upon exercise of this Warrant the aggregate number and kind
of shares which, if this Warrant had been exercised immediately prior to such
time, the Holder would have owned upon such exercise and immediately thereafter
been entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. Any adjustment made pursuant to this Section shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination, and shall apply to successive subdivisions and combinations. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) In case the Company shall distribute to all holders of
shares of Common Stock (including any such distribution made to the stockholders
of the Company in connection with a consolidation or merger in which the Company
is the surviving or continuing corporation) evidences of its indebtedness, cash,
or assets (other than distributions and dividends payable as contemplated by
Section 5(a) above), or rights, options, or warrants to subscribe for or
purchase shares of Common Stock or securities convertible into or exchangeable
for shares of Common Stock, then, in each case, the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive such
distribution by a fraction, the numerator of which shall be the Current Market
Price (as determined pursuant to Section 5(e) hereof) per share of Common Stock
on such record date, less the fair market value (as determined in good faith by
the board of directors of the Company, whose determination shall be conclusive
absent manifest error) of the portion of the evidences of indebtedness or assets
so to be distributed, or of such rights, options, or warrants or convertible or
exchangeable securities, or the amount of such cash, applicable to one share,
and the denominator of which shall be such Current Market Price per share of
Common Stock. Such adjustment shall become effective at the close of business on
such record date.
(c) Whenever there shall be an adjustment as provided in
this Section 5, the Company shall within 15 days thereafter cause written notice
thereof to be sent by registered mail, postage prepaid, to the Holder, at its
address as it shall appear in the Warrant Register, which notice shall be
accompanied by an officer's certificate setting forth the number of Warrant
Shares issuable hereunder and the exercise price thereof after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or other shares of the Company upon the exercise of this
Warrant. If any fraction of a share would be issuable upon the exercise of this
Warrant (or specified portions thereof), the Company may issue a whole share in
lieu of such fraction or the Company may purchase such fraction for an amount in
cash equal to the same fraction of the Current Market Price of such shares of
Common Stock on the date of exercise of this Warrant.
-3-
(e) The Current Market Price per share of Common Stock on
any date shall be deemed to be the average of the daily closing prices for the
five (5) consecutive trading days immediately preceding the date in question.
The closing price for each day shall be the last reported sales price regular
way or, in case no such reported sale takes place on such day, the closing bid
price regular way, in either case on the principal national securities exchange
on which the Common Stock is listed or admitted to trading or, if the Common
Stock is not listed or admitted to trading on any national securities exchange,
the highest reported bid price for the Common Stock as furnished by the National
Association of Securities Dealers, Inc. through NASDAQ or a similar organization
if NASDAQ is no longer reporting such information. If on any such date the
Common Stock is not listed or admitted to trading on any 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.
(f) No adjustment in the Exercise Price shall be required
if such adjustment is less than $0.01, PROVIDED, that any adjustments which by
reason of this Section 5 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 5 shall be made to the nearest cent or to the nearest thousandth of a
share, as the case may be.
(g) Upon each adjustment of the Exercise Price as a result
of the calculations made in this Section 5, this Warrant shall thereafter
evidence the right to purchase, at the adjusted Exercise Price, that number of
shares of Common Stock (calculated to the nearest hundredth) obtained by
dividing (i) the product obtained by multiplying (A) the number of shares of
Common Stock purchasable upon exercise of this Warrant prior to adjustment of
the Exercise Price by (B) the Exercise Price in effect prior to adjustment of
the Exercise Price by (ii) the Exercise Price in effect after such adjustment of
the Exercise Price.
6. CONSOLIDATIONS AND MERGERS. In case of any (1) merger or
consolidation of the Company with or into another person, or (2) sale by the
Company of more than one-half of the assets of the Company (on a book value
basis) in one or a series of related transactions, or (3) tender or other offer
or exchange (whether by the Company or another person) pursuant to which holders
of Common Stock are permitted to tender or exchange their shares for other
securities, stock, cash or property of the Company or another person; then the
Holder shall have the right thereafter to (A) exercise this Warrant for the
shares of stock and other securities, cash and property receivable upon or
deemed to be held by holders of Common Stock following such merger,
consolidation or sale, and the Holder shall be entitled upon such event or
series of related events to receive such amount of securities, cash and property
as the Common Stock for which this Warrant could have been exercised immediately
prior to such merger, consolidation or sales would have been entitled, (B) in
the case of a merger or consolidation, (x) require the surviving entity to issue
to the Holder a warrant entitling the Holder to acquire shares of such entity's
common stock, which warrant shall have terms identical (including with respect
to exercise) to the terms of this Warrant and shall be entitled to all of the
rights and privileges set forth herein and the agreements pursuant to which this
Warrant was issued (including, without limitation, as such rights relate to the
acquisition, transferability, registration and listing of such shares of stock
other securities issuable upon exercise thereof), or (C) in the event of an
exchange or tender offer or other transaction contemplated by clause (3) of this
Section, tender or exchange this Warrant for such securities, stock, cash and
other property receivable upon or deemed to be held by holders of Common Stock
that have tendered or exchanged their shares of Common Stock following such
tender or exchange, and the Holder shall be entitled upon such exchange or
tender to receive such amount of securities, cash and property as the shares
-4-
of Common Stock for which this Warrant could have been exercised immediately
prior to such tender or exchange would have been entitled as would have been
issued. In the case of clause (B), the exercise price applicable for the newly
issued warrant shall be based upon the amount of securities, cash and property
that each shares of Common Stock would receive in such transaction and the
Exercise Price immediately prior to the effectiveness or closing date for such
transaction. The terms of any such merger, sale, consolidation, tender or
exchange shall include such terms so as continue to give the Holder the right to
receive the securities, cash and property set forth in this Section upon any
conversion or redemption following such event. This provision shall similarly
apply to successive such events.
7. NOTICE OF CERTAIN EVENTS. In case at any time any of the
following occur:
(a) The Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company; or
(b) The Company shall offer to all the holders of its
shares of Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(c) The Company shall take any action to effect any
reclassification or change of outstanding shares of Common Stock or any
consolidation, merger, sale, lease or conveyance of property, described in
Section 6; or
(d) The Company shall take any action to effect any
liquidation, dissolution or winding-up of the Company or a sale of all or
substantially all of its property, assets and business;
THEN, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least
fifteen (15) days prior to (i) the date as of which the holders of record of
shares of Common Stock to be entitled to receive any such dividend,
distribution, rights, warrants or other securities are to be determined, (ii)
the date on which any such offer to holders of shares of Common Stock is made,
or (iii) the date on which any such reclassification, change of outstanding
shares of Common Stock, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution or winding-up is expected to become effective
and the date as of which it is expected that holders of record of shares of
Common Stock shall be entitled to exchange their shares for securities or other
property, if any, deliverable upon such reclassification, change of outstanding
shares, consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution or winding-up. Nothing herein shall allow a Holder to delay or
prevent any of the foregoing actions.
8. REGISTRATION RIGHTS. The Warrant Shares issuable upon the
exercise of this Warrant shall be entitled to the identical registration rights,
and be subject to the identical conditions, limitations and restrictions
relating to such registration rights, granted to investors in the Company's
September 2000 Private Placement pursuant to Section 7 of each of those certain
Subscription Agreements between the Company and certain investors accepted by
the Company on the date of the original issuance of this Warrant (collectively,
the "Subscription Agreement"). The Warrant Shares shall be included within the
definition of "Registrable Securities" under the Subscription Agreement and the
Holder be included within the definition of "Holder" under the Subscription
Agreement.
-5-
9. PAYMENT OF EXERCISE PRICE. The Holder shall pay the
Exercise Price by delivery of immediately available funds.
10. 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 (except for any tax that is payable in
respect of any such transfer and any related exercise of this Warrant and that
would be payable pursuant to the first sentence of this Section 10 were such
certificate to be issued in the name of the Holder).
11. LEGEND. In the event that either a registration statement
covering the resale of the Warrant Shares and naming the Holder as a selling
stockholder thereunder is not then effective or the Warrant Shares are not
freely transferable without volume restrictions pursuant to Rule 144(k)
promulgated under the Act, the certificate or certificates evidencing the
Warrant Shares, shall bear the following legend:
"The securities represented hereby have not been
registered under the Securities Act of 1933, as amended
or any state securities laws and neither the securities
nor any interest therein may be offered, sold,
transferred, pledged or otherwise disposed of except
pursuant to an effective registration statement under
such Act or pursuant to an available exemption from, or
in a transaction not subject to, the registration
requirements of the securities act and in accordance
with applicable state securities laws."
12. REPLACEMENT OF WARRANTS. 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 and execution of a reasonable
lost security indemnification agreement, the Company shall execute and deliver
to the Holder thereof a new Warrant of like date, tenor and denomination.
13. NO RIGHTS AS 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.
14. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made when delivered, or mailed by registered or certified mail, return
receipt requested:
(a) If to the registered Holder of this Warrant, to the
address of such Holder as it shall appear in the Warrant Register; or
(b) If to the Company, to the address set forth on the
first page of this Warrant or to such other address as the Company may designate
by notice to the Holder.
-6-
15. SUCCESSORS. All the covenants, agreements, representations
and warranties contained in this Warrant shall bind the parties hereto and their
respective heirs, executors, administrators, distributees, successors and
assigns.
16. HEADINGS. The Article and Section headings in this Warrant
are inserted for purposes of convenience only and shall have no substantive
effect.
17. GOVERNING LAW. This Warrant shall be construed in
accordance with the laws of the State of Delaware, without regard to principles
of conflicts of law.
18. MODIFICATION OF AGREEMENT. This Warrant shall not
otherwise be modified, supplemented or amended in any respect unless such
modification, supplement or amendment is in writing and signed by the Company
and the Holder of this Warrant and Holders of any portion of the Warrant
subsequently assigned or transferred in accordance with the terms of this
Warrant.
19. CONSENT TO JURISDICTION. The Company and the Holder
irrevocably consent to the non-exclusive jurisdiction of the courts of the State
of New York and of any federal court located in such State in connection with
any action or proceeding arising out of or relating to this Warrant, any
document or instrument delivered pursuant to, in connection with or
simultaneously with this Warrant, or a breach of this Warrant or any such
document or instrument. In any such action or proceeding, the Company waives
personal service of any summons, complaint or other process and agrees that
service thereof may be made in accordance with Section 14 hereof.
20. WARRANT AGENT. The Company shall serve as warrant agent
under this Warrant. Upon thirty (30) days' notice to the Holder, the Company may
appoint a new warrant agent. Any corporation into which the Company or any new
warrant agent may be merged or any corporation resulting from any consolidation
to which the Company or any new warrant agent shall be a party or any
corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business shall
be a successor warrant agent under this Warrant without any further act. Any
such successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder's last address as shown on the Warrant Register.
21. MISCELLANEOUS.
(a) This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and assigns. This
Warrant may be amended only in writing signed by the Company and the Holder and
their successors and assigns.
(b) Subject to Section 21(a), above, nothing in this
Warrant shall be construed to give to any person or corporation other than the
Company and the Holder any legal or equitable right, remedy or cause under this
Warrant. This Warrant shall inure to the sole and exclusive benefit of the
Company and the Holder.
(c) In case any one or more of the provisions of this
Warrant shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to
-7-
agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Warrant.
-8-
IN WITNESS WHEREOF, the undersigned has executed this
Warrant as of the date set forth below by its duly authorized officer.
Dated: September [ ], 2000 CAMBRIDGE HEART, INC.
By:_____________________________
Name:
Title:
-9-
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To Cambridge Heart, Inc.:
In accordance with the Warrant enclosed with this Form of
Election to Purchase, the undersigned hereby irrevocably elects to purchase
_____________ shares of common stock, $.001 par value per share, of Cambridge
Heart, Inc. (the "Common Stock") and encloses herewith $________ in cash,
certified or official bank check or checks, which sum represents the aggregate
Exercise Price (as defined in the Warrant) for the number of shares of Common
Stock to which this Form of Election to Purchase relates, together with any
applicable taxes payable by the undersigned pursuant to the Warrant.
The undersigned requests that certificates for the shares of
Common Stock issuable upon this exercise be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER
_________________________
________________________________________________________________________________
(Please print name and address)
If the number of shares of Common Stock issuable upon this
exercise shall not be all of the shares of Common Stock which the undersigned is
entitled to purchase in accordance with the enclosed Warrant, the undersigned
requests that a New Warrant (as defined in the Warrant) evidencing the right to
purchase the shares of Common Stock not issuable pursuant to the exercise
evidenced hereby be issued in the name of and delivered to:
________________________________________________________________________________
(Please print name and address)
Dated: __________________, ____ Name of Holder:
(Print) ___________________________________
By:
Name:
Title:
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
-10-
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the attached Warrant.)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto _________________, having an address at
___________________________ _______________________, the attached Warrant to the
extent of the right to purchase ____________ shares of Common Stock, $0.001 par
value per share, of Cambridge Heart, Inc. (the "COMPANY"), together with all
right, title, and interest therein, and does hereby irrevocably constitute and
appoint _________________ as attorney to transfer such Warrant on the books of
the Company, with full power of substitution.
Dated: _______________, _____
_________________________________
Print name of holder of Warrant
By: ____________________________________
Name:
Title:
NOTICE
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.
