Exhibit 4.7
This Warrant was originally issued on June 19, 2002. THESE SECURITIES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
APPLICABLE STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER
SUCH ACT OR AN EXEMPTION THEREFROM. ANY SUCH TRANSFER MAY ALSO BE
SUBJECT TO APPLICABLE STATE SECURITIES LAWS.
NEPHROS, INC.
STOCK PURCHASE WARRANT
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Date of Issuance: June 19, 2002 Certificate No. W-1
FOR VALUE RECEIVED, Nephros, Inc., a Delaware corporation (the "Company"),
hereby grants to Plexus Services Corp. or its permitted assigns (the
"Registered Holder") the right to purchase from the Company 600,000 shares of
the Company's Common Stock at a price per share of $3.00 (as adjusted from time
to time hereunder, the "Exercise Price"). Certain capitalized terms used herein
are defined in Section 4 hereof. The amount and kind of securities obtainable
pursuant to the rights granted hereunder and the purchase price for such
securities are subject to adjustment pursuant to the provisions contained in
this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
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1A. Exercise Period. The Registered Holder may exercise, in whole or in part
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(but not as to a fractional share of Common Stock), the purchase rights
represented by this Warrant at any time and from time to time after the Date of
Issuance to and including the fifth anniversary thereof (the "Exercise Period").
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when the Company
has received all of the following items (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1C
below, executed by the Person exercising all or part of the purchase
rights represented by this Warrant (the "Purchaser");
(b) this Warrant; and
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(c) a certified check payable to the Company in an amount equal to
the product of the Exercise Price multiplied by the number of shares of
Common Stock being purchased upon such exercise (the "Aggregate Exercise
Price").
(ii) Certificates for shares of Common Stock purchased upon exercise of
this Warrant shall be delivered by the Company to the Purchaser within
twenty business days after the date of the Exercise Time. Unless this
Warrant has expired or all of the purchase rights represented hereby have
been exercised, the Company shall prepare a new Warrant, substantially
identical hereto, representing the rights formerly represented by this
Warrant which have not expired or been exercised and shall within such
twenty-day period, deliver such new Warrant to the Person designated for
delivery in the Exercise Agreement.
(iii) The Common Stock issuable upon the exercise of this Warrant shall
be deemed to have been issued to the Purchaser at the Exercise Time, and the
Purchaser shall be deemed for all purposes to have become the record holder
of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Registered
Holder for any issuance tax in respect thereof or other cost incurred by the
Company in connection with such exercise and the related issuance of shares
of Common Stock. Each share of Common Stock issuable upon exercise of this
Warrant shall upon payment of the Exercise Price therefor, be fully paid and
nonassessable and free from all liens and charges, with respect to the
issuance thereof, created by the Company.
(v) The Company shall not close its books against the transfer of this
Warrant or of any share of Common Stock issued or issuable upon the exercise
of this Warrant in any manner which interferes with the timely exercise of
this Warrant. The Company shall from time to time take all such action as
may be necessary to assure that the par value per share of the unissued
Common Stock acquirable upon exercise of this Warrant is at all times equal
to or less than the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with any Registered Holder or
Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be
made by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise of any
portion of this Warrant is to be made in connection with a registered public
offering or the sale of the Company, the exercise of any portion of this
Warrant may, at the election of the holder hereof, be conditioned upon the
consummation of the public offering or sale of the Company in which case
such exercise shall not be deemed to be effective until the consummation of
such transaction.
(viii) The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock solely for the purpose of
issuance upon the exercise of the Warrants, such number of shares of Common
Stock issuable upon the exercise of all outstanding Warrants. All shares of
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and
charges created by the Company. The Company shall take all such actions as
may be necessary to assure
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that all such shares of Common Stock may be so issued without violation of
any applicable law or governmental regulation or any requirements of any
domestic securities exchange upon which shares of Common Stock may be listed
(except for official notice of issuance which shall be immediately delivered
by the Company upon each such issuance). The Company shall not take any
action which would cause the number of authorized but unissued shares of
Common Stock to be less than the number of such shares required to be
reserved hereunder for issuance upon exercise of the Warrants.
1C. Exercise Agreement. The Registered Holder shall exercise this Warrant by
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executing and delivering to the Company the Exercise Agreement substantially in
the form set forth in Exhibit I hereto, except that if, with the prior written
consent of the Company, the shares of Common Stock are not to be issued in the
name of the Person in whose name this Warrant is registered, the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Common Stock are to be issued. Such Exercise Agreement shall be
dated the actual date of execution thereof.
1D. Fractional Shares. No fractional shares of Common Stock shall be issued
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upon any exercise of Warrants. If more than one Warrant Certificate shall be
delivered for exercise at one time by the same holder, the number of full
shares or securities that shall be issuable upon exercise shall be computed on
the basis of the aggregate number of Warrants exercised. If a fractional share
of Common Stock would, but for the provisions of paragraph 1A and this
paragraph 1D, be issuable upon exercise of the rights represented by this
Warrant, the Company shall, within five business days after the date of the
Exercise Time, deliver to the Purchaser a check payable to the Purchaser in
lieu of such fractional share in an amount equal to the difference between
Market Price of such fractional share as of the date of the Exercise Time and
the Exercise Price of such fractional share.
1E. Securities Law Provisions.
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(i) Except as otherwise permitted by this Section 1E, each certificate
representing shares of Common Stock issued upon the exercise of a Warrant,
and each certificate issued upon the transfer of any such Common Stock,
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or any other
securities laws and may not be transferred, sold or otherwise disposed
of in the absence of such registration or an exemption therefrom under
such Act or other laws."
(ii) Prior to any transfer of any Warrant that is not registered under an
effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), the Registered Holder will give written
notice to the Company of such Registered Holder's intention to effect such
transfer and to comply in all other respects with this Section 1E. Each such
notice (i) shall describe the manner and circumstances of the proposed
transfer in sufficient detail to enable counsel to render the opinions
referred to below, and (ii) shall designate counsel for the Registered
Holder giving such notice. The Registered Holder giving such notice will
submit a copy thereof to the counsel designated in such notice, which
counsel shall be experienced in securities law matters and the Company will
promptly submit a copy thereof to its counsel.
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If in the opinion of both such counsel the proposed transfer may be effected
without registration under the Securities Act, such Registered Holder shall
thereupon be entitled to transfer such securities in accordance with the terms
of the notice delivered by such Registered Holder to the Company. Each Warrant
issued upon or in connection with such transfer shall bear the legend set forth
on the first page of this Warrant.
If in the opinion of either or both such counsel the proposed transfer may
not legally be effected without registration of such Warrants under the
Securities Act (such opinions to state the basis of the legal conclusions
reached therein), the Company will promptly so notify the Registered Holder
thereof and thereafter such Registered Holder shall not be entitled to transfer
such Warrants until either (x) receipt by the Company of a further notice from
such Registered Holder pursuant to the foregoing provisions of this Section 1E
and fulfillment of the provisions of this Section 1E or (y) such Warrants have
been registered pursuant to an effective registration statement under the Act.
Notwithstanding the foregoing, the Company shall have no obligation to register
any Warrants or, except as stated in the Settlement Agreement and Mutual
Release between Plexus Services Corp. and the Company dated the date hereof,
shares.
Section 2. Adjustment of Exercise Price and Number of Shares. In order to
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prevent dilution of the rights granted under this Warrant, the Exercise Price
shall be subject to adjustment from time to time as provided in this Section 2,
and the number of shares of Common Stock obtainable upon exercise of this
Warrant shall be subject to adjustment from time to time as provided in this
Section 2.
2A. Subdivision or Combination of Common Stock. If the Company at any time
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subdivides (by any stock split, stock dividend, recapitalization or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced and the number of shares of Common Stock obtainable
upon exercise of this Warrant shall be proportionately increased. If the
Company at any time combines (by reverse stock split or otherwise) its
outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of shares of Common Stock obtainable
upon exercise of this Warrant shall be proportionately decreased.
2B. Reorganization, Reclassification, Consolidation, Merger or Sale. Any
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recapitalization (other than as provided in Section 2A above), reorganization,
consolidation, merger, sale of all or substantially all of the Company's assets
or other transaction, in each case which is effected in such a way that the all
outstanding Common Stock is exchanged in whole or in part for other stock,
securities or assets is referred to herein as "Organic Change." Prior to the
consummation of any Organic Change, the Company shall make appropriate
provision to insure that the Registered Holders of the Warrants shall
thereafter have the right to acquire and receive, in lieu of the shares of
Common Stock immediately theretofore acquirable and receivable upon the
exercise of such holder's Warrant, the securities, cash and other assets to
which the holder of the number of shares of Common Stock purchasable (at the
time of such consolidation, merger or sale) upon the exercise of the Warrants
would have been entitled upon such Organic Change. In any such case, the
Company shall make appropriate provision with respect to such holder's rights
and interests to insure that the provisions of this Section 2 and Section 4
shall thereafter be applicable to the Warrants. The Company shall not effect
any such consolidation, merger or sale in which the Company is not the
surviving or successor entity, unless prior to the consummation thereof, the
successor entity resulting from such consolidation or merger or the entity
purchasing such assets assumes by written instrument (in form and substance
reasonably satisfactory to the
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Registered Holder), the obligation to deliver to the Registered Holder such
shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
2C. Notices.
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(i) Upon any adjustment of the Exercise Price, the Company shall give
written notice thereof to the Registered Holder, setting forth in reasonable
detail the calculation of such adjustment. Failure to give such notice shall
not affect the validity of the adjustment.
(ii) The Company shall give written notice to the Registered Holder at
least 20 days prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution upon the
Common Stock or (B) with respect to any pro rata subscription offer to
holders of Common Stock.
Section 3. Lock-up. By its acceptance of this Warrant, each Registered
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Holder agrees not to, effect any sale or other transfer of equity securities of
Nephros, or any securities convertible into or exchangeable or exercisable for
such securities, during the seven days prior to and the 360 day period
beginning on the effective date of the Company's initial public offering or the
180 day period beginning on the effective date of any other underwritten public
offering (except as part of such underwritten registration), unless (x) senior
management of Nephros is bound by a less burdensome lockup restriction, in
which case the Registered Holder will be bound by the same restrictions
applicable to management or (y) the underwriters managing such underwritten
registration otherwise agree in writing.
Section 4. Liquidating Dividends. If the Company declares or pays a dividend
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upon the Common Stock payable otherwise than in cash out of earnings or earned
surplus (determined in accordance with generally accepted accounting
principles, consistently applied) except for a stock dividend payable in shares
of Common Stock (a "Liquidating Dividend"), then the Company shall pay to the
Registered Holder of this Warrant at the time of payment thereof the
Liquidating Dividend which would have been paid to such Registered Holder on
the Common Stock had this Warrant been fully exercised immediately prior to the
date on which a record is taken for such Liquidating Dividend, or, if no record
is taken, the date as of which the record holders of Common Stock entitled to
such dividends are to be determined.
Section 5. Definitions. The following terms have meanings set forth below:
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"Common Stock" means the Company's Common Stock.
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"Market Price" means as to any security the average of the closing prices of
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such security's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any
day such security is not quoted in the NASDAQ System, the average of the
highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which "Market Price" is
being determined and the 20 consecutive business days prior to such day;
provided that if such security
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is listed on any domestic securities exchange the term "business days" as used
in this sentence means business days on which such exchange is open for
trading. If at any time such security is not listed on any domestic securities
exchange or quoted in the NASDAQ System or the domestic over-the-counter
market, the "Market Price" shall be the fair value thereof determined in good
faith by the Board of Directors of the Company.
"Person" means an individual, a partnership, a joint venture, a corporation,
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a limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.
Section 6. No Voting Rights; Limitations of Liability. This Warrant shall
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not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Common Stock acquirable
by exercise hereof or as a stockholder of the Company.
Section 7. Transfers. Neither this Warrant nor any rights hereunder are
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transferable, in whole or in part, unless the Registered Holder has complied
with the transfer conditions referred to in the legend endorsed hereon and in
Section 1 hereof.
Section 8. Warrant Exchangeable for Different Denominations. This Warrant is
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exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. The date the Company initially issues
this Warrant shall be deemed to be the "Date of Issuance" hereof regardless of
the number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
Section 9. Replacement. Upon receipt of evidence reasonably satisfactory to
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the Company (an affidavit of the Registered Holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the Company,
or, in the case of any such mutilation upon surrender of such certificate, the
Company shall (at the Registered Holder's expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
Section 10. Notices. All notices referred to in this Warrant shall be in
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writing and shall be delivered personally, sent by nationally recognized
overnight courier service (charges prepaid) or sent by registered or certified
mail, return receipt requested, postage prepaid and shall be deemed to have
been given (x) if delivered personally, on the date of delivery, (y) if
delivered by overnight courier service, on the date of delivery as evidenced by
the records of the courier service, and (z) if delivered by U.S. mail, 10 days
after having been deposited in the U.S. Mail (i) to the Company, at its
principal executive offices and (ii) to the Registered Holder of this Warrant,
at such holder's address as it appears in the records of the Company (unless
otherwise indicated by any such holder by notice given in accordance with this
Section).
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Section 11. Amendment and Waiver. Except as otherwise provided herein, the
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provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed
by it, only if the Company has obtained the written consent of the Registered
Holder of the Warrant.
Section 12. Descriptive Headings; Governing Law. The descriptive headings of
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the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The laws of the
State of New York shall govern all issues concerning the relative rights of the
Company and the Registered Holders and the construction, validity, enforcement
and interpretation of this Warrant, without giving effect to any choice of law
or conflict of law provision or rule that would cause the application of the
laws of any jurisdictions other than the State of New York.
* * * * * *
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer and to be dated the Date of Issuance hereof.
NEPHROS, INC.
By /s/ Xxxxxx X. Xxxxx
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Its CEO
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EXHIBIT I
EXERCISE AGREEMENT
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To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W- ), hereby agrees to subscribe for the purchase
of shares of the Common Stock covered by such Warrant and makes payment
herewith by certified check in full therefor at the price per share provided by
such Warrant.
Signature _____________
Address ______________
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