COMMON STOCK PURCHASE WARRANT To Purchase [___ (60% of the number of shares of Common Stock that could be acquired by Purchaser at the Closing Date upon conversion of Series B Notes)] Shares of Common Stock of Matritech, Inc.
EXHIBIT
4.5
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS 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
THE 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, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.
COMMON
STOCK PURCHASE WARRANT
To
Purchase [___
(60% of the number of shares of Common Stock that could be acquired by Purchaser
at the Closing Date upon conversion of Series B Notes)]
Shares
of Common Stock of
Matritech,
Inc.
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”)
CERTIFIES that, for value received, _____________ (the “Holder”),
is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the Closing
Date (the
“Initial
Exercise Date”)
and on
or prior to the close of business on the fifth (5th)
anniversary of the Closing Date (the “Termination
Date”)
but
not thereafter, to subscribe for and purchase from Matritech, Inc., a
corporation incorporated in the State of Delaware (the “Company”),
up to
______ [60%
of the number of shares of Common Stock that could be acquired by Purchaser
at
the Closing Date upon conversion of Series B Notes]
shares
(the “Warrant
Shares”)
of
Common Stock, par value $0.01 per share, of the Company (the “Common
Stock”),
such
number of Warrant Shares being subject to adjustments as provided herein.
Additionally, the Holder of this Warrant may become entitled, upon the
conditions and subject to the limitations on exercise and the conditions
hereinafter set forth, to exercise the Warrant for the Additional
Warrant Shares
(as
defined below) at the Additional
Warrant Exercise Price
(as
defined below) and, in such event, this Warrant will be exercisable for the
Additional Warrant Shares at any time prior to the close of business on the
Termination Date. With respect to the Warrant Shares, the purchase price of
one
share of Common Stock under this Warrant shall be $0.63 (the “Warrant
Share Exercise Price”,
and
together with the Additional Warrant Exercise Price, the “Exercise
Price”),
subject to adjustment hereunder. The Warrant Share Exercise Price and the number
of Warrant Shares for which the Warrant is exercisable shall be subject to
adjustment as provided herein. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase
Agreement
(the
“Purchase
Agreement”),
dated
January 22,
2007,
among the Company and the purchasers signatory thereto.
1. Title
to Warrant.
Prior
to the Termination Date and subject to compliance with applicable laws and
Section 7 of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by
the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed; provided,
however,
during
any twelve (12) month period and except for transfers to an Affiliate of the
Holder, the Holder, collectively with successor Holders, may not transfer this
Warrant in more than two (2) transactions to more than four (4) assignees per
transaction. The transferee shall sign an investment letter in form and
substance reasonably satisfactory to the Company.
2. Authorization
of Shares.
The
Company covenants that all Warrant Shares and all Additional Warrant Shares
that
may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant
and in accordance with the terms hereof, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges in
respect of the issue thereof imposed by the Company other than restrictions
on
transfer provided for in the Transaction Documents.
(a) Except
as
provided in Section 4 herein, exercise of the purchase rights represented
by this Warrant may be made at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by the surrender of this
Warrant and the Notice of Exercise Form annexed hereto duly executed, at the
office of the Company (or such other office or agency of the Company as it
may
designate by notice in writing to the registered Holder at the address of such
Holder appearing on the books of the Company) and upon payment of the applicable
Exercise Price of the shares thereby purchased by wire transfer or cashier’s
check drawn on a United States bank or by means of a cashless exercise pursuant
to Section 3(d), the Holder shall be entitled to receive a certificate for
the
number of Warrant Shares so purchased. Certificates for shares purchased
hereunder shall be delivered to the Holder within five (5) trading days after
the date on which this Warrant shall have been exercised as aforesaid. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other person
so designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the applicable Exercise Price and all
taxes required to be paid by the Holder, if any, pursuant to Section 5
prior to the issuance of such shares, have been paid. If the Company fails
to
deliver to the Holder a certificate or certificates representing the Warrant
Shares pursuant to this Section 3(a) by the fifth (5th)
trading
day after the date of exercise, then the Holder will have the right to rescind
such exercise. In addition to any other rights available to the Holder, if
the
Company fails to deliver to the Holder a certificate or certificates
representing the Warrant Shares pursuant to an exercise by the fifth
(5th)
trading
day after the date of exercise and the Holder has not rescinded such exercise
pursuant to this
2
Section
3(a), and if after such fifth (5th)
trading
day the Holder is required by its broker to purchase (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a “Buy-In”),
then
the Company shall (1) pay in cash to the Holder the amount by which
(x) the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y) the amount
obtained by multiplying (A) the number of Warrant Shares and Additional
Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares and Additional Warrant Shares for which such exercise
was not honored or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Company timely complied with its exercise
and delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect
to
an attempted exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In, together with applicable
confirmations and other evidence reasonably requested by the Company. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing shares of Common Stock
upon
exercise of this Warrant as required pursuant to the terms hereof.
(b) If
this
Warrant shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant Shares and
Additional Warrant Shares, deliver to Holder a new Warrant evidencing the rights
of Holder to purchase the unpurchased Warrant Shares and Additional Warrant
Shares called for by this Warrant, which new Warrant shall in all other respects
be identical with this Warrant.
(c) The
Company shall not effect any exercise of this Warrant, and the Holder shall
not
have the right to exercise any portion of this Warrant, pursuant to Section
3(a)
or otherwise, to the extent that after giving effect to such issuance after
exercise, the Holder (together with the Holder’s affiliates), as set forth on
the applicable Notice of Exercise, would beneficially own in excess of 9.99%
of
the number of shares of the Common Stock outstanding immediately after giving
effect to such issuance. For purposes of the foregoing sentence, the number
of
shares of Common Stock beneficially owned by the Holder and its affiliates
shall
include the number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which the determination of such sentence is being made,
but shall exclude the number of shares of Common Stock which would be issuable
upon (A) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its affiliates and (B) exercise
or conversion of the unexercised or nonconverted portion of any other securities
of the Company (including, without limitation, any other Warrants) subject
to a
limitation on
3
conversion
or exercise analogous to the limitation contained herein beneficially owned
by
the Holder or any of its affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 3(c), beneficial ownership shall be
calculated in accordance with Section 13(d) of the 1934 Act. To the extent
that
the limitation contained in this Section 3(c) applies, the determination of
whether this Warrant is exercisable (in relation to other securities owned
by
the Holder) and of which portion of this Warrant is exercisable shall be in
the
sole discretion of such Holder, and the submission of a Notice of Exercise
shall
be deemed to be such Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by such Holder) and of which
portion of this Warrant is exercisable, in each case subject to such aggregate
percentage limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. For purposes of this Section 3(c),
in determining the number of outstanding shares of Common Stock, the Holder
may
rely on the number of outstanding shares of Common Stock as reflected in
(x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be,
(y) a more recent public announcement by the Company or (z) any other
notice by the Company or the Company’s Transfer Agent setting forth the number
of shares of Common Stock outstanding. Upon the written or oral request of
the
Holder, the Company shall within two (2) trading days confirm orally and in
writing to the Holder the number of shares of Common Stock then outstanding.
In
any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its affiliates since the date as of
which such number of outstanding shares of Common Stock was reported. The
provisions of this Section 3(c) may be waived by the Holder upon, at the
election of the Holder (other than SDS Capital Group SPC, LTD. or its
affiliates), not less than sixty-one (61) days’ prior notice to the Company, and
the provisions of this Section 3(c) shall continue to apply until such
sixty-first (61st)
day (or
such later date, as determined by the Holder, as may be specified in such notice
of waiver).
(d) If
at any
time on or after the Company is required, by the terms of the Registration
Rights Agreement of even date herewith, to have an effective Registration
Statement registering the resale of the Warrant Shares by the Holder and there
is no such effective Registration Statement on file with the U.S. Securities
and
Exchange Commission (the “SEC”),
unless such failure results solely because the SEC will not declare the
Registration Statement effective due to interpretations of Rule 415, or if
one
(1) year after the Closing Date there is no effective Registration Statement
registering the resale of the Warrant Shares by the Holders on file with the
SEC, or if the Common Stock is not listed or included for quotation on the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange or the American Stock Exchange, this Warrant
may also be exercised at such time by means of a “cashless exercise” in which
the Holder shall be entitled to receive a certificate for the number of Warrant
Shares equal to the quotient obtained by dividing [(A-B)*(X)] by (A),
where:
(A)
= the
daily volume weighted average price of the Common Stock on the trading day
immediately preceding the date of such election;
4
(B)
= the
Warrant Share Exercise Price of this Warrant, as adjusted; and
(X)
= the
number of Warrant Shares issuable upon exercise of this Warrant in accordance
with the terms of this Warrant by means of a cash exercise rather than a
cashless exercise.
4. No
Fractional Shares or Scrip.
No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. As to any fraction of a share which Holder would
otherwise be entitled to purchase upon such exercise, the Company shall pay
a
cash adjustment in respect of such final fraction in an amount equal to such
fraction multiplied by the Closing Sales Price as defined in the Series B
Notes.
5. Charges,
Taxes and Expenses.
Issuance of certificates for Warrant Shares and Additional Warrant Shares shall
be made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall
be
issued in the name of the Holder or in such name or names as may be directed
by
the Holder; provided,
however,
that in
the event certificates for Warrant Shares are to be issued in a name other
than
the name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
6. Closing
of Books.
The
Company will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
(a) Subject
to compliance with any applicable securities laws and the conditions set forth
in Sections 1 and 7(e) hereof and to the provisions of Section 5(b) of the
Purchase Agreement, this Warrant and all rights hereunder are transferable,
in
whole or in part, upon surrender of this Warrant at the principal office of
the
Company, together with a written assignment of this Warrant substantially in
the
form attached hereto duly executed by the Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled. A Warrant, if properly assigned, may be exercised by a new holder
for
the purchase of Warrant Shares without having a new Warrant issued.
(b) This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 7(a), as to any
5
transfer
which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to
be divided or combined in accordance with such notice.
(c) The
Company shall prepare, issue and deliver at its own expense (other than transfer
taxes) the new Warrant or Warrants under this Section 7.
(d) The
Company agrees to maintain, at its aforesaid office, books for the registration
and the registration of transfer of the Warrants
(e) If,
at
the time of the surrender of this Warrant in connection with any transfer of
this Warrant, the transfer of this Warrant shall not be registered pursuant
to
an effective registration statement under the 1933 Act and under applicable
state securities or blue sky laws, the Company may require, unless waived in
its
reasonable discretion, as a condition of allowing such transfer (i) that
the Holder or transferee of this Warrant, as the case may be, furnish to the
Company a written opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions) to
the
effect that such transfer may be made without registration under the 1933 Act
and under applicable state securities or blue sky laws; (ii) that the
holder or transferee execute and deliver to the Company an investment letter
in
form and substance acceptable to the Company; and (iii) that the transferee
be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7), or (a)(8) promulgated under the 1933 Act or a qualified institutional
buyer as defined in Rule 144A(a) under the 1933 Act.
8. No
Rights as Shareholder until Exercise.
This
Warrant does not entitle the Holder to any voting rights or other rights as
a
shareholder of the Company prior to the exercise hereof. Upon the surrender
of
this Warrant and the payment of the aggregate Exercise Price (or by means of
a
cashless exercise pursuant to Section 3(d) hereof), the Warrant Shares and
Additional Warrant Shares so purchased shall be and be deemed to be issued
to
such Holder as the record owner of such shares as of the close of business
on
the later of the date of such surrender or payment.
9. Loss,
Theft, Destruction or Mutilation of Warrant.
The
Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
or any stock certificate relating to the Warrant Shares or Additional Warrant
Shares, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it (which, in the case of the Warrant, shall not
include the posting of any bond), and upon surrender and cancellation of such
Warrant or stock certificate, if mutilated, the Company will make and deliver
a
new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
10. Saturdays,
Sundays, Holidays, etc.
If the
last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall be a Saturday, Sunday or a legal holiday,
then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.
6
(a) Dilutive
Issuances.
If the
Company shall issue or sell, or is, in accordance with subsections (b)(i)
through (viii) below, deemed to have issued or sold (each, a “Dilutive
Issuance”),
any
additional shares of Common Stock, other than Excluded Stock (the “New
Issuance Shares”),
without consideration or for a consideration per share less than the Exercise
Price in effect immediately prior to the time of such issue or sale (the lowest
price at which such shares of Common Stock are issued or deemed to be issued
hereunder is hereinafter referred to as the “New
Issuance Price”),
then
and in each such case (a “Trigger
Issuance”)
the
then-existing Warrant Share Exercise Price, shall be reduced, as of the close
of
business on the effective date of the Trigger Issuance, to a price determined
in
accordance with the immediately succeeding paragraphs.
Prior
to
stockholder approval of the Stockholder Proposals, the Warrant Share Exercise
Price shall be reduced to the higher of (i) the New Issuance Price or
(ii) $0.63 (appropriately adjusted for any stock split, reverse stock
split, stock dividend or other reclassification or combination of the Common
Stock occurring after the date hereof) (the “Full-Ratchet
Floor Price”).
From
and after the date of stockholder approval of the Stockholder Proposals, if
any,
the Warrant Share Exercise Price shall be reduced to the New Issuance Price.
In
the event that in the time period prior to such stockholder approval a Dilutive
Issuance is made and the Warrant Share Exercise Price is adjusted to the
Full-Ratchet Floor Price instead of the New Issuance Price, then immediately
following such stockholder approval, the Warrant Share Exercise Price shall
be
adjusted to such New Issuance Price if such New Issuance Price is lower than
the
then current Warrant Share Exercise Price.
For
purposes of this subsection (a), “Excluded
Stock”
means
(1) shares of Common Stock issued pursuant to the terms thereof upon the
exercise or conversion of the Company’s options, warrants or convertible
securities outstanding as of the Closing Date in accordance with the terms
of
such options, warrants or other securities as in effect on the Closing Date
and
provided that such securities have not been amended since the Closing Date
to
increase the number of shares of Common Stock issuable thereunder or to lower
the exercise or conversion price thereof; (2) stock, stock options or other
stock rights issued pursuant to any stock or option plan duly adopted by a
majority of the non-employee members of the Board of Directors of the Company
or
a majority of the members of a committee of non-employee directors established
for such purpose; (3) securities issued pursuant to a bona fide
underwritten public offering with gross proceeds of at least $25,000,000;
(4) the shares of Common Stock issuable pursuant to (i) the Series B
Notes and the Series A Notes or (ii) the Series B Warrants and the warrants
issued by the Company on January 13, 2006 in connection with the issuance
of the Series A Notes; (5) securities issued in a bona fide business
acquisition the primary purpose of which, as determined in good faith by a
majority of the members of the Board of Directors of the Company, is not the
raising of capital; (6) capital stock or convertible securities issued in a
joint venture, strategic partnership or licensing arrangement, the primary
purpose of which, as determined in good faith by a majority of the members
of
the Board of Directors of the Company, is not the raising of capital; and
(7) shares of Common Stock issued or issuable by reason of a dividend,
stock split or other distribution on shares of Common Stock (but only to
the
7
extent
that such a dividend, split or distribution results in an adjustment in the
Exercise Price pursuant to the other provisions herein).
Additionally,
for purposes of this subsection (a), the following subsections (b)(i) to (viii)
shall also be applicable:
(b) (i)
Issuance
of Rights or Options.
In case
at any time the Company shall in any manner grant (directly and not by
assumption in a merger or otherwise) any warrants or other rights to subscribe
for or to purchase, or any options for the purchase of, Common Stock or any
stock or security convertible into or exchangeable for Common Stock (such
warrants, rights or options being called “Options”
and
such convertible or exchangeable stock or securities being called “Convertible
Securities”)
whether or not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per share
for
which Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by dividing
(i) the sum (which sum shall constitute the applicable consideration) of
(x) the total amount, if any, received or receivable by the Company as
consideration for the granting of such Options, plus (y) the aggregate
amount of additional consideration payable to the Company upon the exercise
of
all such Options, plus (z), in the case of such Options that relate to
Convertible Securities, the aggregate amount of additional consideration, if
any, payable upon the issue or sale of such Convertible Securities and upon
the
conversion or exchange thereof, by (ii) the total maximum number of shares
of Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Warrant Share Exercise Price
in
effect immediately prior to the time of the granting of such Options, then
the
total number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to have
been issued for such price per share as of the date of granting of such Options
or the issuance of such Convertible Securities and thereafter shall be deemed
to
be outstanding for purposes of adjusting the Warrant Share Exercise Price.
Except as otherwise provided in subsection (b)(iii) of this Section 11, no
adjustment of the Warrant Share Exercise Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise
of
such Options or upon the actual issue of such Common Stock upon conversion
or
exchange of such Convertible Securities.
(ii)
Issuance
of Convertible Securities.
In case
the Company shall in any manner issue (directly and not by assumption in a
merger or otherwise) or sell any Convertible Securities, whether or not the
rights to exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon
such conversion or exchange (determined by dividing (i) the sum (which sum
shall constitute the applicable consideration) of (x) the total amount
received or receivable by the Company as consideration for the issue or sale
of
such Convertible Securities, plus (y) the aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof, by (ii) the total number of shares of Common Stock issuable upon
the conversion or exchange of all such
8
Convertible
Securities) shall be less than the Warrant Share Exercise Price in effect
immediately prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued for such price
per share as of the date of the issue or sale of such Convertible Securities
and
thereafter shall be deemed to be outstanding for purposes of adjusting the
Warrant Share Exercise Price, provided that (a) except as otherwise
provided in subsection (b)(iii) of this Section 11, no adjustment of the
Warrant Share Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible Securities; and
(b) no further adjustment of the Warrant Share Exercise Price shall be made
by reason of the issue or sale of Convertible Securities upon exercise of any
Options to purchase any such Convertible Securities for which adjustments of
the
Warrant Share Exercise Price have been made pursuant to the other provisions
of
Section 11.
(iii)
Change
in Option Price or Conversion Rate.
Upon
the happening of any of the following events, namely, if the purchase price
provided for in any Option referred to in subsection (b)(i) hereof, the
additional consideration, if any, payable upon the conversion or exchange of
any
Convertible Securities referred to in subsections (b)(i) or (b)(ii), or the
rate
at which Convertible Securities referred to in subsections (b)(i) or (b)(ii)
are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Warrant Share Exercise Price in
effect at the time of such event shall forthwith be readjusted to the Warrant
Share Exercise Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the case may
be,
at the time initially granted, issued or sold. On the termination of any Option
for which any adjustment was made pursuant to subsections (a) and (b) hereof
or
any right to convert or exchange Convertible Securities for which any adjustment
was made pursuant to this subsection (b) (including without limitation upon
the
redemption or purchase for consideration of such Convertible Securities by
the
Company), the Warrant Share Exercise Price then in effect hereunder shall
forthwith be changed to the Warrant Share Exercise Price which would have been
in effect at the time of such termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such termination,
never been issued.
(iv)
Stock
Dividends.
In case
the Company shall declare a dividend or make any other distribution upon any
stock of the Company (other than the Common Stock) payable in Common Stock,
Options or Convertible Securities, then any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
(v)
Consideration
for Stock.
In case
any shares of Common Stock, Options or Convertible Securities shall be issued
or
sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Company therefor. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for a consideration
other than cash, the amount of the consideration other than cash
9
received
by the Company shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Company using standard
commercial valuation methods appropriate for valuing such assets; provided,
however,
that if
the Required Holders do not agree to such fair value calculation within three
(3) business days after receipt thereof from the Company, then such fair value
shall be determined in good faith by an investment banker or other appropriate
expert of national reputation selected by the Company and reasonably acceptable
to the Required Holders, with the costs of such appraisal to be borne 50%
equally by the Company and 50% by the Holders (ratably on the basis of the
respective number of Warrant Shares outstanding). In case any Options shall
be
issued in connection with the issue and sale of other securities of the Company,
together comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for nominal consideration. If Common Stock, Options
or Convertible Securities shall be issued or sold by the Company and, in
connection therewith, other Options or Convertible Securities (the “Additional
Rights”)
are
issued without any specific consideration allocated to such Additional Rights,
then the consideration received or deemed to be received by the Company for
such
Additional Rights shall be deemed to be nominal.
(vi)
Record
Date.
In case
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them (i) to receive a dividend or other distribution
payable in Common Stock, Options or Convertible Securities or (ii) to
subscribe for or purchase Common Stock, Options or Convertible Securities,
then
such record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date of the
granting of such right of subscription or purchase, as the case may
be.
(vii)
Treasury
Shares.
The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company or any of its
wholly-owned subsidiaries, and the disposition of any such shares (other than
the cancellation or retirement thereof) shall be considered an issue or sale
of
Common Stock for the purpose of this Section 11.
(c) Stock
Splits and Dividends.
If the
Company shall, at any time or from time to time while Warrants are outstanding,
pay a dividend or make a distribution on its Common Stock in shares of Common
Stock, subdivide its outstanding shares of Common Stock into a greater number
of
shares or combine its outstanding shares of Common Stock into a smaller number
of shares or issue by reclassification of its outstanding shares of Common
Stock
any shares of its capital stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
corporation), then the Warrant Share Exercise Price and the number of Warrant
Shares in effect immediately prior to the date upon which such change shall
become effective shall be adjusted by the Company so that the Holder shall
be
entitled to receive the number of shares of Common Stock or other capital stock
which such Holder would have received immediately following such event had
this
Warrant been exercised immediately prior to
10
such
event. Such adjustments shall be made successively whenever any event listed
above shall occur.
(d) Reorganization
or Reclassification.
If any
capital reorganization or reclassification of the capital stock of the Company
shall be effected in such a way (including, without limitation, by way of
consolidation or merger) that holders of Common Stock but not holders of Company
Warrants shall be entitled to receive stock, securities or assets with respect
to or in exchange for Common Stock then, as a condition of such reorganization
or reclassification, lawful and adequate provision shall be made whereby the
Holder shall thereafter have the right to receive, upon the basis and upon
the
terms and conditions specified herein and in lieu of the shares of Common Stock
of the Company immediately theretofore receivable upon the exercise of this
Warrant, such shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for a number of outstanding shares of Common
Stock equal to the number of shares of such stock immediately theretofore so
receivable had such reorganization or reclassification not taken place and
in
any such case appropriate provision shall be made with respect to the rights
and
interests of such Holder to the end that the provisions hereof (including
without limitation provisions for adjustments of the Warrant Share Exercise
Price) shall thereafter be applicable, as nearly as may be, in relation to
any
shares of stock, securities or assets thereafter deliverable upon the exercise
of such rights (including an immediate adjustment, by reason of such
reorganization or reclassification, of the Exercise Price to the value for
the
Common Stock reflected by the terms of such reorganization or reclassification
if the value so reflected is less than the Warrant Share Exercise Price in
effect immediately prior to such reorganization or reclassification). In the
event of a merger or consolidation of the Company as a result of which a greater
or lesser number of shares of common stock of the surviving corporation are
issuable to holders of the Common Stock of the Company outstanding immediately
prior to such merger or consolidation, the Warrant Share Exercise Price in
effect immediately prior to such merger or consolidation shall be adjusted
in
the same manner as though there were a subdivision or combination of the
outstanding shares of Common Stock of the Company.
(e) Distributions.
In case
the Company shall fix a payment date for the making of a distribution to all
holders of Common Stock (including any such distribution made in connection
with
a consolidation or merger in which the Company is the continuing corporation)
of
evidences of indebtedness or assets (other than cash dividends or cash
distributions payable out of consolidated earnings or earned surplus or
dividends or distributions referred to in subsection (c) of this
Section 11), or subscription rights or warrants, the Warrant Share Exercise
Price to be in effect after such payment date shall be determined by multiplying
the Warrant Share Exercise Price in effect immediately prior to such payment
date by a fraction, the numerator of which shall be the total number of shares
of Common Stock outstanding multiplied by the Market Price (as defined below)
per share of Common Stock immediately prior to such payment date, less the
fair
market value (as determined by the Company’s Board of Directors in good faith)
of said assets or evidences of indebtedness so distributed, or of such
subscription rights or warrants, and the denominator of which shall be the
total
number of shares of Common Stock outstanding multiplied by such Market Price
per
share of Common Stock immediately prior to such payment date. “Market
Price”
means,
for any security as of
11
any
date,
the last sales price of such security on the principal trading market where
such
security is listed or traded as reported by Bloomberg Financial Markets (or
a
comparable reporting service of national reputation selected by the Company
and
reasonably acceptable to the holder hereof if Bloomberg Financial Markets is
not
then reporting closing sales prices of such security) (in any case,
“Bloomberg”),
or if
the foregoing does not apply, the last reported sales price of such security
on
a national exchange or in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no such price is
reported for such security by Bloomberg, the average of the bid prices of all
market makers for such security as reported in the “pink sheets” by Pink Sheets
LLC, in each case for such date or, if such date was not a trading day for
such
security, on the next preceding date which was a trading day. If the Market
Price cannot be calculated for such security as of such date on any of the
foregoing bases, the Market Price of such security on such date shall be the
fair market value as reasonably determined by an investment banking firm
selected by the Company and reasonably acceptable to the holder hereof, with
the
costs of such appraisal to be borne by the Company. Such adjustment shall be
made successively whenever such a payment date is fixed.
(f) Effective
Date of Adjustment.
An
adjustment to the Warrant Share Exercise Price shall become effective
immediately after the payment date in the case of each dividend or distribution
and immediately after the effective date of each other event which requires
an
adjustment.
(g) Subsequent
Adjustments.
In the
event that, as a result of an adjustment made pursuant to subsections (a)
through (e), the Holder shall become entitled to receive any shares of capital
stock of the Company other than shares of Common Stock, the number of such
other
shares so receivable upon the exercise of this Warrant shall be subject
thereafter to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions contained herein.
(h) Other
Action Affecting Exercise Price.
If, at
any time during the Exercise Period, the Company takes any action affecting
the
Common Stock that would be covered by Section 11, but for the manner in
which such action is taken or structured, which would in any way diminish the
value of this Warrant, then the Warrant Share Exercise Price shall be adjusted
in such manner as the Board of Directors of the Company shall in good faith
determine to be equitable under the circumstances.
(i) Additional
Warrant Shares.
If
after the Registration Statement registering the Warrant Shares required by
Section 2(a) of the Registration Rights Agreement has been declared
effective by the Securities and Exchange Commission, (i)(A) sales of
Warrant Shares can no longer be made pursuant to such Registration Statement,
(B) such Registration Statement is no longer effective, or (C) the
Common Stock is not listed or included for quotation on the Nasdaq Capital
Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York
Stock Exchange or the American Stock Exchange and (ii) the Holder no longer
holds any portion of the Notes (or Conversion Shares into which they have been
converted) (each of such events, a “Default
Event”)
and
such Default Event exists without interruption for more than five
12
(5)
business days, then this Warrant will become exercisable for an additional
number of shares of Common Stock (the “Additional
Warrant Shares”)
equal
to (s) the number of Warrant Shares then issuable upon exercise of the
Warrant assuming a cashless exercise pursuant to Section 3(d) of this Warrant,
multiplied by (t) ten hundredths (.10). If the Default Event continues
without interruption for more than sixty (60) days, then this Warrant will
become exercisable for a further amount of Additional Warrant Shares equal
to
(u) the number of Warrant Shares then issuable upon exercise of the Warrant
assuming a cashless exercise pursuant to Section 3(d) of this Warrant,
multiplied by (v) five hundredths (.05). If the Default Event continues
without interruption for more than one hundred twenty (120) days, then this
Warrant will become exercisable (in part or in whole) for a further amount
of
Additional Warrant Shares equal to (w) the number of Warrant Shares then
issuable upon exercise of the Warrant assuming a cashless exercise pursuant
to
Section 3(d) of this Warrant, multiplied by (x) five hundredths (.05).
Thereafter, for each additional sixty (60) day period after the one hundred
and
twentieth (120th)
day
following the commencement of a Default Event during which such Default Event
continues without interruption, but limited to a period of three hundred sixty
(360) days of existence of a continuous Default Event, this Warrant will become
exercisable for a further amount of Additional Warrant Shares equal to
(y) the number of Warrant Shares then issuable upon exercise of the Warrant
assuming a cashless exercise pursuant to Section 3(d) of this Warrant,
multiplied by (z) five hundredths (.05). After the three hundred and
sixtieth (360th)
day of
existence of a continuous Default Event, the Holder will accrue no further
rights to Additional Warrant Shares. The exercise price for such Additional
Warrant Shares (the “Additional
Share Exercise Price”)
shall
be $.01 per share.
12. Voluntary
Adjustment by the Company.
The
Company may at any time during the term of this Warrant reduce the then current
Warrant Share Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company provided that such
reduction shall apply on a pro
rata
basis to
all of the Warrants.
13. Notice
of Adjustment.
Whenever the number of Warrant Shares or number or kind of securities or other
property purchasable upon the exercise of this Warrant or the Warrant Share
Exercise Price is adjusted, as herein provided, the Company shall give notice
thereof to the Holder, which notice shall state the number of Warrant Shares
(and other securities or property) purchasable upon the exercise of this Warrant
and the Warrant Share Exercise Price for such Warrant Shares (and other
securities or property) after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made.
14. Call
Provision.
Unless
and to the extent Holder is prohibited from exercising under Section 3(c),
notwithstanding any other provision contained herein to the contrary, in the
event that the closing bid price of a share of Common Stock as traded on the
American Stock Exchange, Inc. (or such other exchange or stock market on which
the Common Stock may then be listed or quoted) equals or exceeds $2.52
(appropriately adjusted for any stock split, reverse stock split, stock dividend
or other reclassification or combination of the Common Stock occurring after
the
date hereof) for twenty (20) consecutive trading days commencing after the
Registration Statement (as defined in the Registration Rights Agreement) has
been declared
13
effective,
the Company, upon thirty (30) days prior written notice (the “Notice
Period”)
given
to the Holder within one business day immediately following the end of such
twenty (20) trading day period, may call this Warrant, in whole or in part,
at a
redemption price equal to $0.63 per
share
of Common Stock then purchasable pursuant to this Warrant; provided that
(i) all of Warrant Shares issuable upon the exercise of this Warrant either
(A) are registered pursuant to an effective Registration Statement (as
defined in the Registration Rights Agreement) that has not been suspended and
for which no stop order is in effect, and pursuant to which the Holder is able
to sell such shares of Common Stock at all times during the Notice Period or
(B) no longer constitute Registrable Securities (as defined in the
Registration Rights Agreement); (ii) the number of shares of Common Stock
issuable upon the exercise of Warrants and any other series of warrants included
in such notice of redemption does not exceed the cumulative trading volume
of
the Common Stock on any stock exchange or market on which the Common Stock
may
then be traded for the thirty (30) consecutive trading days prior to the first
day of the Notice Period; (iii) the Company has not issued a warrant
redemption notice on any other series of warrants within sixty (60) days of
the
first day of the Notice Period; and (iv) the first day of such Notice
Period is not within three hundred and sixty-five (365) days of the Closing
Date
or within ninety (90) days of the Termination Date. In the event that less
than
all of the Company Warrants (as defined below) are called pursuant to this
Section 14, any call of less than all the Company Warrants shall be on a
pro rata basis for each holder of Company Warrants. Notwithstanding any such
notice by the Company, the Holder shall have the right to exercise this Warrant
prior to the end of the Notice Period. The term “Company
Warrants”
means
a
series of Warrants of like tenor issued by the Company pursuant to the Purchase
Agreement.
15. Notice
of Corporate Action.
If at
any time:
(a) the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution, or any right
to
subscribe for or purchase any evidences of its indebtedness, any shares of
stock
of any class or any other securities or property, or to receive any other right,
or
(b) there
shall be any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation or
merger of the Company with, or any sale, transfer or other disposition of all
or
substantially all the property, assets or business of the Company to, another
corporation or,
(c) there
shall be a voluntary or involuntary dissolution, liquidation or winding up
of
the Company;
then,
in
any one or more of such cases, the Company shall give to Holder (i) at
least ten (10) days’ prior written notice of the date on which a record is to be
taken for such dividend, distribution or right or for determining rights to
vote
in respect of any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, liquidation or winding up, and (ii) in the
case of any such reorganization, reclassification, merger, consolidation, sale,
transfer, disposition, dissolution, liquidation or winding up, at least ten
(10)
days’ prior written notice of the date when the same shall take place. Such
notice in accordance with the foregoing clause also shall specify (i) the
date on which the holders of Common Stock shall be entitled to any
14
such
dividend, distribution or right, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up is to take place and the time, if any such time is to be fixed, as of which
the holders of Common Stock shall be entitled to exchange their Warrant Shares
for securities or other property deliverable upon such disposition, dissolution,
liquidation or winding up. Each such written notice shall be sufficiently given
if addressed to Holder at the last address of Xxxxxx appearing on the books
of
the Company and delivered in accordance with Section 17(d).
16. Authorized
Shares.
The
Company covenants that during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise
of
any purchase rights under this Warrant. The Company further covenants that
its
issuance of this Warrant shall constitute full authority to its officers who
are
charged with the duty of executing stock certificates to execute and issue
the
necessary certificates for the Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action
as
may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the Trading Market upon which the Common Stock may be
listed.
Except
and to the extent as waived or consented to by the Holder, the Company shall
not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this
Warrant, but will at all times in good faith assist in the carrying out of
all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the Company will
(a) not increase the par value of any Warrant Shares or Additional Warrant
Shares above the amount payable therefor upon such exercise immediately prior
to
such increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares or Additional Warrant Shares upon the exercise
of this Warrant, and (c) use commercially reasonable efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.
17. Miscellaneous.
(a) Jurisdiction.
This
Warrant shall constitute a contract under the laws of Delaware, without regard
to its conflict of law, principles or rules.
(b) Restrictions.
The
Holder acknowledges that the Warrant Shares and Additional Warrant Shares
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities
laws.
15
(c) Nonwaiver
and Expenses.
No
course of dealing or any delay or failure to exercise any right hereunder on
the
part of Holder shall operate as a waiver of such right or otherwise prejudice
Holder’s rights, powers or remedies, notwithstanding all rights hereunder
terminate on the Termination Date. If the Company willfully and knowingly fails
to comply with any provision of this Warrant, which failure to comply results
in
any material damages to the Holder, the Company shall pay to Holder such amounts
as shall be sufficient to cover any costs and expenses including, but not
limited to, reasonable attorneys’ fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto
or
in otherwise enforcing any of its rights, powers or remedies
hereunder.
(d) Notices.
Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
(e) Limitation
of Liability.
No
provision hereof, in the absence of any affirmative action by Holder to exercise
this Warrant or purchase Warrant Shares or Additional Warrant Shares, and no
enumeration herein of the rights or privileges of Holder, shall give rise to
any
liability of Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company
or
by creditors of the Company.
(f) Remedies.
Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
the
provisions of this Warrant and hereby agrees to waive the defense in any action
for specific performance that a remedy at law would be adequate.
(g) Successors
and Assigns.
Subject
to applicable securities laws, this Warrant and the rights and obligations
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant and shall be enforceable by any such Holder
or
holder of Warrant Shares or Additional Warrant Shares.
(h) Amendment.
This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.
(i) Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
(j) Headings.
The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
16
Dated:
January 22, 2007
|
MATRITECH,
INC.
|
||
| |
|
|
| By: | ||
|
Name: Xxxxxxx X. Xxxxx |
||
| Title: Chief Executive Officer | ||
NOTICE
OF EXERCISE
To: Matritech,
Inc.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares/Additional Warrant
Shares of Matritech, Inc. pursuant to the terms of the attached Warrant (only
if
exercised in full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
[
]
lawful money of the United States; or
[
]
the cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 3(d), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise provision set forth in subsection 3(d).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the
name
of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following:
_______________________________
_______________________________
_______________________________
(4)
Accredited
Investor/Qualified Institutional Buyer.
The
undersigned is either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act of 1933,
as
amended (the “Securities Act”) or (ii) a qualified institutional buyer as
defined in Rule 144(A)(a) under the Securities Act.
[PURCHASER]
By:
______________________________
Name:
Title:
Dated:
________________________
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this
form
and supply required information.
Do
not
use this form to exercise the warrant.)
FOR
VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated:
______________, _______
Holder’s
Signature: ____________________________
Holder’s
Address: _____________________________
Signature
Guaranteed: __________________________________
NOTE:
The
signature to this Assignment Form must correspond with the name as it appears
on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.