WARRANT TO PURCHASE MEMBERSHIP UNITS OF VYCOR MEDICAL, LLC (BRIDGE LOAN)
THIS
WARRANT AND THE UNITS PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933. SUCH WARRANTS AND UNITS MAY NOT BE SOLD, OFFERED FOR
SALE, TRANSFERRED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN
EFFECT WITH RESPECT TO SUCH SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
WARRANT
TO PURCHASE MEMBERSHIP UNITS OF
VYCOR
MEDICAL, LLC
(BRIDGE
LOAN)
Dated
as
of 12/15,
2006
HOLDER:
Fountainhead Capital Partners Limited
NUMBER
OF
UNITS: 50.22
THIS
CERTIFIES THAT, for good and valuable consideration, the above referenced holder
("Holder"),
or
its registered assigns, is entitled to subscribe for and purchase from VYCOR
MEDICAL, LLC (the "Company"),
at
any time commencing on the date of this Warrant (the "Warrant")
and
ending at the close of business five (5) years from the date of issuance, 50.22
fully-paid and non-assessable membership units of Vycor Medical, LLC at exercise
price of US$7,965.00 per unit (the "Warrant
Exercise Price"),
subject to the adjustment provisions of Sections 5, 6 and 11 of this
Warrant.
This
Warrant is issued in connection with a transaction between the Holder and the
Company as more fully described in that certain Bridge Loan Agreement of even
date herewith ("Bridge Loan Agreement"). The Units which may be acquired upon
exercise of this Warrant are referred to herein as the "Warrant
Units."
As
used herein, the term "Holder"
includes any party who acquires all or a part of this Warrant as a permitted
transferee of Holder; the term "Unit" means and includes the Company's presently
authorized membership units.
This
Warrant is subject to the following provisions, terms and
conditions:
1.
Exercise;
Transferability; Vesting.
(a)
The
rights represented by this Warrant may be exercised by the Holder hereof, in
whole or in part, by written notice of exercise (in the form attached hereto)
delivered to the Company at the principal office of the Company at any time
after the original issue date of this Warrant and prior to the expiration of
this Warrant and accompanied or preceded by the surrender of this Warrant along
with payment of the Warrant Exercise Price for such Units (i) in cash, by check
or by wire transfer of federal funds, (ii) only to the extent permitted by
the
Company, in its sole and absolute discretion, on a cashless basis in exchange
for other securities of the Company, or (iii) by a combination of the methods
specified in clauses (a) and (b). Notwithstanding the foregoing, the Company,
in
its sole discretion, may extend and maintain, or arrange for the extension
and
maintenance of credit to the Holder to finance payment of the purchase price
on
such terms as may be approved by the Board of Directors of the Company in
accordance with applicable law.
(b)
This
Warrant may not be sold, transferred, assigned, hypothecated or divided except
as provided in Section 9 hereof.
2. Exchange
and Replacement. Subject
to Sections 1 and 9 hereof, this Warrant is exchangeable upon the surrender
hereof by the Holder to the Company at its office for new Warrants of like
tenor
and date representing in the aggregate the right to purchase the number of
Warrant Units purchasable hereunder, each of such new Warrants to represent
the
right to purchase such number of Warrant Units (not to exceed the aggregate
total number purchasable hereunder) as shall be designated by the Holder at
the
time of such surrender. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant, and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will make and deliver a new Warrant of like
tenor, in lieu of this Warrant; provided, however, that if Holder shall be
such
Holder, an agreement of indemnity by such Holder in customary form shall be
sufficient for all purposes of this Section 2. This Warrant shall be promptly
canceled by the Company upon the surrender hereof in connection with any
exchange or replacement. The Company shall pay all expenses, taxes (other than
stock transfer taxes), and other charges payable in connection with the
preparation, execution, and delivery of Warrants pursuant to this Section
2.
3. Issuance
of the Warrant Units.
(a) The
Company agrees that the Warrant Units shall be and will be deemed to be issued
to the Holder as of the close of business on the date on which this Warrant
shall have been surrendered and the payment made for such Warrant Units as
provided herein. Subject to the provisions of the next section, certificates
for
the Warrant Units so purchased shall be delivered to the Holder within a
reasonable time after the rights represented by this Warrant shall have been
so
exercised, and, unless this Warrant has expired, a new Warrant representing
the
right to purchase the number of Warrant Units, if any, with respect to which
this Warrant shall not then have been exercised shall also be delivered to
the
Holder within such time.
(b) Notwithstanding
the foregoing, however, the Company shall not be required to deliver any
certificate for Warrant Units upon exercise of this Warrant except in accordance
with exemptions from the applicable securities registration requirements or
registrations under applicable securities laws. Nothing herein, however, shall
obligate the Company to effect registrations under federal or state securities
laws. If registrations are not in effect and if exemptions are not available
when the Holder seeks to exercise the Warrant, the Warrant exercise period
will
be extended, if need be, to prevent the Warrant from expiring, until such time
as either registrations become effective or exemptions are available, and the
Warrant shall then remain exercisable for a period of at least 90 calendar
days
from the date the Company delivers to the Holder written notice of the
availability of any registrations or exemptions. The Holder agrees to execute
such documents and make such representations, warranties and agreements as
maybe
required solely to comply with the exemptions relied upon by the Company, or
any
registrations made, for the issuance of the Warrant Units.
4. Covenants
of the Company. The
Company covenants and agrees that all Warrant Units will, upon issuance, be
duly
authorized and issued, fully paid, nonassessable, and free from all taxes,
liens, and charges with respect to the issue thereof. The Company further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, the Company will at all times have authorized
and reserved for the purpose of issue or transfer upon exercise of the purchase
rights evidenced by this Warrant a sufficient number of Units to provide for
the
exercise of the rights represented by this Warrant.
5. Restrictions
on Issuance and Transfer of Units. Units
acquired pursuant to the exercise of this Warrant which are not registered
under
the Securities Act of 1933, as amended (the "Act"), shall be subject to
restrictions on transfer and as required by applicable state and/or federal
securities laws. Any unregistered Units acquired by exercise of this Warrant
shall bear a legend referring to the restrictions and limitations of this
Section. The Company may impose stop transfer instructions to implement such
restrictions and limitations.
6. Anti-dilution
Adjustments. The
number of Warrant Units purchasable upon the exercise of this Warrant and the
Warrant Exercise Price shall be subject to adjustment as follows:
(a)
In
case the Company shall (i) pay a dividend or make a distribution on its Units
or
other securities, (ii) subdivide its outstanding Units into a greater number
of
Units, (iii) combine its outstanding Units into a smaller number of Units or
(iv) issue, by reclassification of its Units or other securities of the Company
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), the number of
Warrant Units purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive the
kind and number of Warrant Units and other securities of the Company which
such
holder would have owned or would have been entitled to receive immediately
after
the happening of any of the events described above, had the Warrant been
exercised immediately prior to the happening of such event or any record date
with respect thereto. Any adjustment made pursuant to this subsection 6(a)
shall
become effective immediately after the effective date of such
event.
(b) In
case
the Company shall issue rights, options, warrants or convertible securities
to
holders of its Units, without any charge to such holders, containing the right
to subscribe for or purchase Units, the number of Warrant Units thereafter
purchasable upon the exercise of this Warrant shall be determined by multiplying
the number of Warrant Units theretofore purchasable upon exercise of this
Warrant by a fraction, of which the numerator shall be the number of Units
outstanding immediately prior to the issuance of such rights, options, warrants
or convertible securities plus the number of additional Units offered for
subscription or purchase, and of which the denominator shall be the number
of
Units outstanding immediately prior to the issuance of such rights, options,
warrants or convertible securities. Such adjustment shall be made whenever
such
rights, options, warrants or convertible securities are issued, and shall become
effective immediately upon issuance of such rights, options, warrants or
convertible securities. In the event of such adjustment, corresponding
adjustments shall be made to the Warrant Exercise Price.
(c) In case
the
Company shall distribute to holders of its
Units
evidences
of its indebtedness or assets (excluding cash dividends or distributions out
of
current earnings made in the ordinary course of business consistent with past
practices), then in each case the number of Warrant Units thereafter purchasable
upon the exercise of this Warrant shall be determined by multiplying the number
of Warrant Units theretofore purchasable upon exercise of this Warrant by a
fraction, of which the numerator shall be the then Market Price (as defined
below) on the date of such distribution, and of which the denominator shall
be
such Market Price on such date minus the then fair value (determined as provided
in subsection 6(e) below) of the portion of the assets or evidences of
indebtedness so distributed applicable to one Unit. Such adjustment shall be
made whenever any such distribution is made and shall become effective on the
date of distribution. In the event of any such adjustment, the number of Units
subject to the Warrant shall also be adjusted and shall be that number
determined by multiplying the number of Units issuable upon exercise before
the
adjustment by a fraction, the numerator of which shall be the Warrant Exercise
Price in effect immediately before the adjustment and the denominator of which
shall be the Warrant Exercise Price as so adjusted.
(d) Whenever
the number of Warrant Units purchasable upon the exercise of this Warrant is
adjusted as provided in this Section 6, the Warrant Exercise Price payable
upon
exercise of the Warrant shall be adjusted by multiplying such Warrant Exercise
Price immediately prior to such adjustment by a fraction, the numerator of
which
shall be the number of Warrant Units purchasable upon the exercise of this
Warrant immediately prior to such adjustment, and the denominator of which
shall
be the number of Warrant Units purchasable immediately thereafter.
(e) For
the
purpose of this Section 6, the term "Unit"
shall
mean (i) the securities designated as the Units of the Company at the date
of
this Agreement or (ii) any other class of securities resulting from successive
changes or reclassifications of such Units. In the event that at any time,
as a
result of an adjustment made pursuant to this Section 6, a Warrantholder shall
become entitled to purchase any securities of the Company other than Units,
(i)
if the Warrantholder's right to purchase is on any other basis than that
available to all holders of the Company's Units, the Company shall obtain an
opinion of a reputable investment banking firm valuing such other securities
and
(ii) thereafter the number of such other securities so purchasable upon exercise
of a Warrant and the Warrant Exercise Price of such securities shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent
as
practicable to the provisions with respect to the Units contained in this
Section 6.
(f) Upon
the
expiration of any rights, options, warrants or conversion privileges, if such
shall not have been exercised, the number of Warrant Units purchasable upon
exercise of a Warrant
and the Warrant
Exercise Price, to the extent a Warrant has not then been exercised, shall,
upon
such expiration, be readjusted and shall thereafter be such number and such
price as they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) on the basis of
(A)
the fact that the only Units issued in respect of such rights, options, warrants
or conversion privileges were the Units, if any, actually issued or sold upon
the exercise of such rights, options, warrants or conversion privileges, and
(B)
the fact that such Units, if any, were issued or sold for the consideration
actually received by the Company upon such exercise plus the consideration,
if
any, actually received by the Company for the issuance, sale or grant of all
such rights, options, warrants or conversion privileges whether or not
exercised; provided, however, that no such readjustment shall have the effect
of
decreasing the numbers of Warrant Units purchasable upon exercise of a Warrant
or increasing the Warrant Exercise Price by an amount in excess of the amount
of
the adjustment made in respect of the issuance, sale or grant of such rights,
options, warrants or conversion privileges.
(g) Upon
any
adjustment of the Warrant Exercise Price and the number of Warrant Units subject
to this Warrant, then and in each such case, the Company shall give written
notice thereof, by first-class mail, postage prepaid, addressed to the Holder
as
shown on the books of the Company, which notice shall state the Warrant Exercise
Price resulting from such adjustment and the increase or decrease, if any,
in
the number of Units purchasable at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts
upon
which such calculation is based.
7.
Merger,
Reorganization or Consolidation. In
any
case in which a transaction would result in a complete liquidation of the
Company or a merger, reorganization, or consolidation of the Company with any
other unrelated corporation or other entity in which the Company is not the
surviving corporation or the Company becomes a wholly-owned subsidiary of
another unrelated corporation or other entity (all such transactions being
referred to herein as a "Reorganization"), the surviving corporation or other
entity shall be required to assume the Warrant or to issue substitute warrants
in place thereof which substitute warrants shall provide for terms at least
as
favorable to the Warrantholders as contained in this Warrant and shall provide
the Warrantholder the right to acquire the kind and amount of Units and other
securities and property which the Warrantholder would have owned or been
entitled to receive had the Warrants been exercised immediately prior to such
Reorganization.
8. No
Voting Rights. This
Warrant shall not entitle the Holder to any voting rights or other rights as
a
stockholder of the Company.
9. Notice
of Transfer of Warrant or Resale of the Warrant Units.
(a) The
Holder, by acceptance hereof, agrees to give written notice to the Company
before transferring this Warrant or transferring any Warrant Units of such
Holder's intention to do so, describing briefly the manner of any proposed
transfer. Promptly upon receiving such written notice, the Company shall present
copies thereof to the Company's counsel and to counsel to the original purchaser
of this Warrant. If in the opinion of each such counsel the proposed transfer
may be effected without registration or qualification (under any federal or
state securities laws), the Company, as promptly as practicable, shall notify
the Holder of such opinion, whereupon the Holder shall be entitled to transfer
this Warrant or to dispose of Warrant Units received upon the previous exercise
of this Warrant, all in accordance with the terms of the notice delivered by
the
Holder to the Company; provided that an appropriate legend may be endorsed
on
the Warrant or the certificates for such Warrant Units respecting restrictions
upon transfer thereof necessary or advisable in the opinion of counsel and
satisfactory to the Company to prevent further transfers which would
be
in violation of
Section 5 of the Act, and applicable state securities laws; and provided further
that the prospective transferee or purchaser shall execute such documents and
make such representations, warranties, and agreements as may be reasonably
required solely to comply with the exemptions relied upon by the Company or
the
Holder for the transfer or disposition of the Warrant or Warrant
Units.
(b) If
in the
opinion of counsel referred to in this Section 9, the proposed transfer or
disposition of this Warrant or such Warrant Units described in the written
notice given pursuant to this Section 9 may not be effected without registration
or qualification of this Warrant or such Warrant Units, the Company shall
promptly give written notice thereof to the Holder.
10. Fractional
Units. Fractional
Units may be issued upon the exercise of this Warrant.
11. Capitalization
Adjustments.
(a)
Notwithstanding anything to the contrary contained in this Warrant, in the
event
that the Company sells or issues Unit or rights, options, warrants or
convertible securities containing the right to subscribe for, purchase or
exchange into Units at a price per unit of less than US$3,982.50 (or securities
convertible into Units) (the "Reduced
Issue Price")
at any
time prior to the closing and receipt by the Company of additional funding
(following the Closing) in the net amount of at least ten million dollars
($10,000,000.00), then the Warrant Exercise Price shall automatically be reduced
by multiplying the Warrant Exercise Price by a fraction, the numerator of which
is the Reduced Issue Price and the denominator of which is US$3,982.50.
Any
adjustment contemplated by this Section 11 may be waived by consent of Holders
owning of a majority of the aggregate outstanding Warrants issued pursuant
to
the Conversion Agreement.
(b)
The
Warrant Exercise Price has been established based on the assumptions (the
"Capitalization
Assumptions")
that,
immediately prior to the issuance and funding of the Debenture, as described
in
the Bridge Loan Agreement, the issued and outstanding Units of the Company
consisted entirely of 1111.11 Units, and (ii) except as disclosed on Schedule
11(b)(ii) attached hereto, there will be no options, warrants, subscription
agreements or other rights or arrangements to acquire or issue any Unit of
the
Company other than the Warrants issued pursuant to said Bridge Loan Agreement.
Holder understands and agrees that if, subsequent to the issue date of this
Warrant, the Company reasonably determines in good faith that the Capitalization
Assumptions were not true and correct, the Warrant Exercise Price and number
of
Warrant Units issuable upon exercise of this Warrant will be adjusted so that
the total number of Warrant Units issued to and the total Warrant Exercise
Price
paid by all Holders, if all Warrants were exercised in full, would not exceed
the number of Warrant Units or be less than the total Warrant Exercise Price
that would have been issued and payable had the Capitalization Assumptions
been
true and correct.
12.
Representations
and Warranties. The
Company represents and warrants to the Holder of this Warrant as
follows:
(a) This
Warrant has been duly authorized and executed by the Company and is a valid
and
binding obligation of the Company enforceable in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and the rules of law or principles at equity governing
specific performance, injunctive relief and other equitable
remedies;
(b) The
Warrant Units have been duly authorized and reserved for issuance by the Company
and, when issued in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable; and
(c) The
execution and delivery of this Warrant is not, and the issuance of the Warrant
Units upon exercise of this Warrant in accordance with the terms hereof will
not
be, inconsistent with the articles of organization or other organizational
documents of the Company, do not and will not contravene, in any material
respect, any governmental rule or regulation, judgment or order applicable
to
the Company, and do not and will not conflict with or contravene any provision
of, or constitute a default under, any indenture, mortgage, contract or other
instrument of which the Company is a party or by which it is bound or require
the consent or approval of, the giving of notice to, the registration or filing
with or the taking of any action in respect of or by, any Federal, state or
local government authority or agency or other person, except for the filing
of
notices pursuant to federal and state securities laws, which filings will be
effected by the time required thereby.
13. Notices.
Notices
and other communications provided for herein shall be in writing and may be
given by mail, courier, confirmed telex or facsimile transmission and shall,
unless otherwise expressly required, be deemed given when received or when
delivery thereof is refused. In the case of Holder, such notices and
communications shall be addressed to its address as shown on the books
maintained by the Company unless Holder shall notify the Company that notices
and communications should be sent to a different address (or telex or facsimile
number) in which case such notices and communications shall be sent to the
address (or telex or facsimile number) specified by Holder.
14. Governing
Law. This
Warrant shall be governed by and construed in accordance with the laws of the
State of New York.
15. General
Provisions.
(a) This
Agreement contains the entire understanding between the parties with respect
to
the subject matter hereof, and supersedes any and all prior written or oral
agreements between the parties with respect to the subject matter hereof. There
are no representations, agreements, arrangements, or understandings, either
written or oral, between or among the parties with respect to the subject matter
hereof which are not set forth in this Agreement.
(b) Each
party to this Agreement agrees to perform such further acts and to execute
and
deliver such other and additional documents as may be reasonably necessary
to
carry out the provisions of this Agreement.
(c) If
any
term, provision, covenant, or condition of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, or unenforceable for any reason,
such invalidity, illegality, or unenforceability shall not affect any of the
other terms, provisions, covenants, or conditions of this Agreement, each of
which shall be binding and enforceable.
(d) This
Agreement may not be modified, extended, renewed or substituted without an
amendment or other agreement in writing signed by the parties to this
Agreement.
IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer as the date first specified above.
|
VYCOR
MEDICAL, LLC
|
||
By:
|
/s/
Xxxxxxx Xxxxxxxx
|
||
Name:
Xxxxxxx Xxxxxxxx
|
|||
Title:
CEO
|
VYCOR
MEDICAL, LLC
WARRANT
EXERCISE NOTICE
(TO
BE
SIGNED ONLY UPON EXERCISE OF WARRANT)
The
undersigned Holder of the foregoing Warrant hereby irrevocably elects to
exercise the right, represented by such Warrant, to
purchase___________ Units
of
VYCOR MEDICAL, LLC and tenders herewith payment in accordance with Section
1 of
said Warrant as follows:
______________ Units
for CASH:
|
|
$
_____________________
|
Please
deliver the stock certificate to the address set forth below. In addition,
if
the number of Units being purchased pursuant to this exercise is less than
the
all of the Units purchasable under this Warrant, please return
to
such
address either (1) the Warrant marked to reflect the remaining balance of Units
purchasable thereunder or (2) a newly issued Warrant in the name of the
undersigned for such remaining balance of Units purchasable
thereunder.
Dated:
_______________________
Name
of
Warrant Holder:
__________________________________________________________________________
Tax
Identification No. or
Social
Security No. of Warrant Holder:
________________________________________________________________
____________________________________________
(Signature)
Title:
NOTE:
THE
ABOVE SIGNATURE SHOULD CORRESPOND EXACTLY WITH THE NAME OF THE WARRANT HOLDER
AS
IT APPEARS ON THE FIRST PAGE OF THE WARRANT OR ON A DULY EXECUTED WARRANT
ASSIGNMENT.
VYCOR
MEDICAL, LLC
WARRANT
ASSIGNMENT
(TO
BE
SIGNED ONLY UPON TRANSFER OF WARRANT)
FOR
VALUE
RECEIVED,
the undersigned hereby sells, assigns and transfers unto
_______________________________________________________________________________,
the assignee, whose address is
_________________________________, and whose tax identification or social
security number is ____________________________, the right represented by the
foregoing Warrant to purchase _________________________________ Units of
VYCOR
MEDICAL, LLC, to
which
the foregoing Warrant relates and appoints _________________________ attorney
to
transfer said right on the books of Secure Science Corporation, with full power
of substitution in the premises. If the number of Units assigned is less than
all of the Units purchasable under the Warrant, anew Warrant will be
issued
in
the
name of the undersigned for the remaining balance of the Units
purchasable
thereunder.
Dated:
_____________________________________
Name
of
Warrant Holder/Assignor:
________________________________________
(Please
print)
________________________________
(Signature)
Title:
Address
of Warrant Holder/Assignor.
|
_________________________________________
|
|
_________________________________________
|
|
_________________________________________
|
Tax
Identification No. or Social Security No. of
Warrant
Holder/Assignor: _______________________________________________________
NOTE:
THE
ABOVE SIGNATURE SHOULD CORRESPOND EXACTLY WITH TH NAME OF THE WARRANT HOLDER
AS
IT APPEARS ON THE FIRST PAGE C THE WARRANT OR ON A DULY
EXECUTED ASSIGNMENT
FORM.
Schedule
11(b)(ii)
Warrant Holder
|
option price
|
|
units
|
|
Exercise Term
|
|||||
Xx.
Xxxxxx
|
$
|
4,000
|
20
|
TBD | ||||||
Xxxxxx
Xxxxxx
|
$
|
2,000
|
10
|
TBD | ||||||
Xxx
Xxxxxx
|
$
|
2,000
|
10
|
TBD | ||||||
GC
Advisors
LLC
|
$
|
4,000
|
12
|
1 year | ||||||
$
|
6,233
|
12
|
2 years | |||||||
$
|
8,810
|
12
|
3 year |