COMMON STOCK PURCHASE WARRANT MEDITE CANCER DIAGNOSTICS, INC.
Exhibit 10.4
NEITHER THIS SECURITY NOR THE SECURITIES FOR 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.
THIS SECURITY AND 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
Warrant
Shares: 4,120,308 Issue Date: September 26,
2017
Initial
Exercise Date: March 26, 2018
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received, GPB DEBT HOLDINGS II, LLC, or its
successors and assigns (the “Holder”) is entitled, upon
the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time six (6) months after
the date hereof (the “Initial Exercise Date”) and on or
prior to the close of business on the five (5) year anniversary of
the Issue Date (the “Termination Date”) but not
thereafter, to subscribe for and purchase from MEDITE CANCER
DIAGNOSTICS, INC., a Delaware corporation (the
“Company”), up to Four Million One Hundred Twenty
Thousand Three Hundred and Eighty (4,120,308) shares of Common
Stock (subject to adjustment hereunder, the “Warrant
Shares”). The initial exercise price per share of the Common
Stock under this Warrant (the “Exercise Price”) shall
be equal to $0.60, subject to adjustment as provided below. The
purchase price of one Warrant Share under this Warrant shall be
equal to the Exercise Price.
Section
1. Definitions.
Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in that certain Securities Purchase
Agreement (as it may be amended, restated, supplemented or
otherwise modified from time to time in accordance with its terms,
the “Purchase Agreement”), dated September 26, 2017,
among the Company and the Purchaser.
Section
2. Exercise.
(a) Exercise
of the purchase rights represented by this Warrant may be made, in
whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to
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 the Holder appearing on the books of the Company) of a
duly executed facsimile (or other electronic method) copy of the
Notice of Exercise Form annexed hereto. Within two (2) Business
Days following the date of exercise as aforesaid, the Holder shall
deliver the aggregate Exercise Price for the shares specified in
the applicable Notice of Exercise by wire transfer or
cashier’s check drawn on a United States bank unless the
cashless exercise procedure specified in Section 2(c) below is
specified in the applicable Notice of Exercise. Notwithstanding
anything herein to the contrary (although the Holder may surrender
the Warrant to, and receive a replacement Warrant from, the
Company), the Holder shall not be required to physically surrender
this Warrant to the Company until the Holder has purchased all of
the Warrant Shares available hereunder and the Warrant has been
exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within three (3) Business
Days of the date the final Notice of Exercise is delivered to the
Company. Partial exercises of this Warrant resulting in purchases
of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number
of Warrant Shares purchasable hereunder in an amount equal to the
applicable number of Warrant Shares purchased. The Holder and the
Company shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. The Company shall deliver
any objection to any Notice of Exercise Form within one (1)
Business Day of delivery of such notice. The Holder by acceptance
of this Warrant, acknowledges and agrees that, by reason of the
provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares
available for purchase hereunder at any given time may be less than
the amount stated on the face hereof.
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(b) Reserved.
(c) Cashless
Exercise. If at the time of any exercise of this Warrant a
registration statement is not available for the issuance of the
Warrant Shares, then this Warrant may also be exercised at the
Holder’s election, in whole or in part and in lieu of making
the cash payment otherwise contemplated to be made to the Company
upon such exercise, at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a
number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:
(A) =
the VWAP on the trading day immediately preceding the date on which
Holder elects to exercise this Warrant by means of a
“cashless exercise,” as set forth in the applicable
Notice of Exercise;
(B) =
the Exercise Price of this Warrant, as adjusted hereunder;
and
(X) =
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.
For
purposes of this Section 2(c), “VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on
the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market, the New York Stock Exchange, the
daily volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the Trading Market on which
the Common Stock is then listed or quoted as reported by Bloomberg
L.P. (“Bloomberg”) (based on a trading day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)
if the Common Stock is quoted on the OTCQB or OTCQX, the volume
weighted average price of the Common Stock for such date (or the
nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the
Common Stock is not then listed or quoted for trading on OTCQB or
OTCQX and if prices for the Common Stock are then reported in the
“Pink Sheets” published by OTC Markets, Inc. (or a
similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) in all other cases, the fair
market value of a share of Common Stock, as the case may be, as
determined by an independent appraiser selected in good faith by
the Holder and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
If Warrant Shares are issued in such a cashless exercise, the
parties acknowledge and agree that in accordance with Section
3(a)(9) of the Securities Act, the Warrant Shares shall take on the
characteristics of the Warrants being exercised, and the holding
period of the Warrants being exercised may be tacked on to the
holding period of the Warrant Shares. The Company agrees
not to take any position contrary to this Section
2(c).
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(d)
Mechanics of
Exercise.
(i) Delivery
of Certificates Upon Exercise. Certificates for shares
purchased hereunder shall be transmitted to the Holder by the
Transfer Agent to the Holder by crediting the account of the
Holder’s prime broker with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the Company is then a participant in such
system and either (A) there is an effective registration statement
permitting the issuance of the Warrant Shares to or resale of the
Warrant Shares by the Holder or (B) this Warrant is being exercised
via cashless exercise and Rule 144 is available, and otherwise by
physical delivery to the address specified by the Holder in the
Notice of Exercise by the date that is three (3) Business Days
after the latest of (A) the delivery to the Company of the Notice
of Exercise and (B) payment of the aggregate Exercise Price as set
forth above (unless by cashless exercise, if permitted) (such date,
the “Warrant Share Delivery Date”). The Warrant Shares
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, with payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if any, pursuant to
Section 2(d)(vi) prior to the issuance of such shares, having been
paid. The Company understands that a
delay in the delivery of the Warrant Shares after the Warrant Share
Delivery Date (a “Delivery Failure”) could result in
economic loss to the Holder. If the Company fails for any
reason to credit Holder’s or its designees’ account
with DTC or issue and deliver to the Holder such certificate or
certificates pursuant to this Section 2(d)(i) by the Warrant Share
Delivery Date (a “Delivery Failure”), and if on or
after such Warrant Share Delivery Date the Holder purchases (in an
open market transaction or otherwise) shares of the Company’s
Common Stock to deliver in satisfaction of a sale by the Holder of
all or any portion of the number of shares of Common Stock issuable
upon such conversion that the Holder anticipated receiving from the
Company (a “Buy-In”), then, in addition to all other
remedies available to the Holder, the Company shall, within three
(3) Business Days after receipt of the Holder’s request and
in the Holder’s sole discretion, either, at the
Holder’s option (I) pay cash to the Holder in an amount equal
to the Holder’s total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the
shares of Common Stock so purchased (including, without limitation,
by any other Person in respect, or on behalf, of the Holder) (the
“Buy-In Price”), at which point the Company’s
obligation to so issue and deliver such certificate or credit the
balance account of the Holder or the Holder’s designee, as
applicable, with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s conversion of
the applicable Conversion Amount shall terminate, or (II) promptly
(but in no event later than five two (2) Business Days following
the request by the Holder) honor its obligation to so issue and
deliver to the Holder a certificate or certificates representing
such shares of Common Stock or credit the balance account of such
Holder or such Holder’s designee, as applicable, with DTC for
the number of shares of Common Stock to which the Holder
anticipated receiving from the Company and pay cash to the Holder
in an amount equal to the excess (if any) of the Buy-In Price over
the product of (x) such number of shares of Common Stock multiplied
by (y) the lowest closing sale price or closing bid price (as the
case may be) of the Common Stock on any Business Day during the
period commencing on the date of the applicable Conversion Notice
and ending on the date of such issuance and payout under this
clause II (the “Buy-In Payment Amount”). Nothing herein
or elsewhere shall limit the 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 (or to timely electronically deliver such shares of
Common Stock) upon the conversion of this Note as required pursuant
to the terms hereof. In addition, as
compensation to the Holder for such loss, the Company agrees to pay
(as liquidated damages and not as a penalty) to the Holder for late
issuance of Warrant Shares upon exercise of this Warrant the
proportionate amount of $10 per Business Day (increasing to $20 per
Business Day after the fifth (5th)
Business Day) after the Warrant Share Delivery Date for each $1,000
of Exercise Price of Warrant Shares for which this Warrant is
exercised which are not timely delivered. The Company shall pay any
payments incurred under this Section 2(d)(i) in immediately
available funds upon demand. Furthermore, in addition to any other
remedies which may be available to the Holder, in the event that
the Company fails for any reason to effect delivery of the Warrant
Shares by the Warrant Share Delivery Date, the Holder may revoke
all or part of the relevant Warrant exercise by delivery of a
notice to such effect to the Company, whereupon the Company and the
Holder shall each be restored to their respective positions
immediately prior to the exercise of the relevant portion of this
Warrant, except that the liquidated damages described above shall
be payable through the date notice of revocation or rescission is
given to the Company.
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(ii) Delivery
of New Warrants Upon Exercise. If this Warrant shall have
been exercised in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant certificate, at the time
of delivery of the certificate or certificates representing Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights
of the Holder to purchase the unpurchased Warrant Shares called for
by this Warrant, which new Warrant shall in all other respects be
identical to this Warrant.
(iii) Rescission
Rights. If the Company fails to deliver the Warrant Shares
cause the Transfer Agent to transmit to the Holder a certificate or
the certificates representing the Warrant Shares pursuant to
Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder
will have the right, at any time prior to issuance of such Warrant
Shares, to rescind such exercise.
(iv) Reserved.
(v) 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 the Holder would
otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of
such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole
share.
(vi) Charges,
Taxes and Expenses. Issuance of certificates for 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 including any charges of any clearing firm, 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. The Company shall pay
all Transfer Agent fees required for same-day processing of any
Notice of Exercise.
(vii) 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.
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(e) Holder’s
Exercise Limitations. The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise,
the Holder (together with the Holder’s Affiliates, and any
other Persons acting as a group together with the Holder or any of
the Holder’s Affiliates), would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below). 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 such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates and (ii) exercise or conversion of the unexercised
or nonconverted portion of any other securities of the Company
(including, without limitation, any other Common Stock Equivalents)
subject to a limitation on 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 2(e), beneficial ownership
shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation contained in this
Section 2(e) applies, the determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and
the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with
any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. For purposes of
this Section 2(e), in determining the number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (A) the Company’s most
recent periodic or annual report filed with the Commission, as the
case may be, (B) a more recent public announcement by the Company
or (C) a more recent written notice by the Company or the Transfer
Agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder,
the Company shall within one Business Day 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
“Beneficial Ownership Limitation” shall be 4.99% of the
number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock issuable
upon exercise of this Warrant. The Holder, upon not less than 61
days’ prior notice to the Company, may increase the
Beneficial Ownership Limitation provisions of this Section 2(e)
solely with respect to the Holder’s Warrant, provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of shares of Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of
this Section 2(e) shall continue to apply. Any such increase will
not be effective until the 61st day after such
notice is delivered to the Company. The Holder may also decrease
the Beneficial Ownership Limitation provisions of this Section 2(e)
solely with respect to the Holder’s Warrant at any time,
which decrease shall be effectively immediately upon delivery of
notice to the Company. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(e) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of this Warrant.
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Section
3. Certain
Adjustments.
(a) Stock
Dividends and Splits. If the Company, at any time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock
or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon
exercise of this Warrant or pursuant to any of the other
Transaction Documents), (ii) subdivides outstanding shares of
Common Stock into a larger number of shares, (iii) combines
(including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (iv) issues by
reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock (excluding treasury shares, if
any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock
outstanding immediately after such event, and the number of shares
issuable upon exercise of this Warrant shall be proportionately
adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this
Section 3(a) shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination
or re-classification.
(b) Adjustments
for Issuance of Additional Securities. If the Company, at
any time while this Warrant is outstanding, issue or sell any
additional shares of Common Stock or Common Stock Equivalents
(hereafter defined) (“Additional Shares of Common
Stock”), in a transaction other than an Exempt Issuance, at a
price per share less
than the Exercise Price then in effect or without
consideration (a “Dilutive Issuance” based on a
“Dilutive Issuance Price”), then the (i) Exercise Price
upon each such issuance shall be reduced to an amount equal to the
greater of the Dilutive Issuance Price or $0.30 and (ii) the number
of Warrant Shares (excluding Warrant Shares previously exercised)
shall be increased on a full ratchet basis to the number of shares
of Common Stock determined by multiplying the Exercise Price then
in effect immediately prior to such adjustment by the number of
Warrant Shares (excluding Warrant Shares previously exercised)
acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment. By way of example, if E is the
total number of Warrant Shares in effect immediately prior to such
Dilutive Issuance, F is the Exercise Price in effect immediately
prior to such Dilutive Issuance, and G is the Dilutive Issuance
Price, the adjustment to the. [number of Warrant Shares can be
expressed in the following formula: Total number of Warrant Shares
after such Dilutive Issuance = the quotient obtained from dividing
[E x F] by G.
If the
price per share for which Additional Shares of Common Stock are
sold, or may be issuable pursuant to any such Common Stock
Equivalent, is less than the applicable Exercise Price then in
effect, or if, after any such issuance of Common Stock Equivalents,
the price per share for which Additional Shares of Common Stock may
be issuable thereafter is amended or adjusted, and such price as so
amended shall be less than the applicable Exercise Price in effect
at the time of such amendment or adjustment, then the applicable
Exercise Price and number of Warrant Shares shall be adjusted upon
each such issuance or amendment as provided in this Section
3(b). If any shares of Common Stock or Common Stock
Equivalents are issued or sold or deemed to have been issued or
sold for cash, the amount of such consideration received by the
Company will be deemed to be the net amount received by the Company
therefor. If any shares of Common Stock or Common Stock Equivalents
are issued or sold for a consideration other than cash, the amount
of such consideration received by the Company will be the fair
value of such consideration, except where such consideration
consists of publicly traded securities, in which case the amount of
consideration received by the Company will be the VWAP of such
public traded securities on the date of receipt. If any shares of
Common Stock or Common Stock Equivalents are issued to the owners
of the non-surviving entity in connection with any merger in which
the Company is the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of the
net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock or Common Stock
Equivalents, as the case may be.
“Common Stock
Equivalents” means any rights or warrants or options to
purchase any Common Stock or Convertible Securities.
The
provisions of this Section 3(b) shall apply each time a Dilutive
Issuance occurs after the Original Issuance Date. No
adjustment shall be made pursuant to this Section 3(b) with respect
to an Exempt Issuance.
(c) Reserved.
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(d) Subsequent
Rights Offerings. In addition
to any adjustments pursuant to Section 3(a) above, if at any time
the Company grants, issues or sells any Common Stock Equivalents or
rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of shares of Common
Stock (the “Purchase Rights”), then the Holder will be
entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which the Holder could have
acquired if the Holder had held the number of shares of Common
Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including without
limitation, the Beneficial Ownership Limitation) immediately before
the date on which a record is taken for the grant, issuance or sale
of such Purchase Rights, or, if no such record is taken, the date
as of which the record holders of shares of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder’s right to
participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder
shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a
result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership
Limitation).
(e) Pro
Rata Distributions. If the Company, at any time while this
Warrant is outstanding, shall distribute to all holders of Common
Stock (and not to the Holder) evidences of its indebtedness or
assets (including cash and cash dividends) or rights or warrants to
subscribe for or purchase any security other than the Common Stock
(which shall be subject to Section 3(c)), then in each such case
the Exercise Price shall be adjusted by multiplying the Exercise
Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution
by a fraction of which the denominator shall be the VWAP determined
as of the record date mentioned above, and of which the numerator
shall be such VWAP on such record date less the then per share fair
market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one
outstanding share of the Common Stock as determined by the Board of
Directors in good faith. In either case the adjustments shall be
described in a statement provided to the Holder of the portion of
assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date mentioned
above.
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(f) Fundamental
Transaction. If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of
the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii)
any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash
or property, (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person or group of Persons whereby
such other Person or group acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of this
Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable (without regard to any
limitation on the exercise of this Warrant), at the option of the
Holder, the number, class, and series of shares of stock of the
successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration (the
“Alternate Consideration”) receivable as a result of
such Fundamental Transaction by a holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to such Fundamental Transaction (without regard to any
limitation on the exercise of this Warrant). For purposes of any
such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and
the Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value
of any different components of the Alternate Consideration. If
holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. Notwithstanding anything to
the contrary, in the event of a Fundamental Transaction, the
Company or any Successor Entity (as defined below) shall, at the
Holder’s option, exercisable at any time concurrently with,
the consummation of the Fundamental Transaction, purchase this
Warrant from the Holder by paying to the Holder an amount of cash
equal to the Black Scholes Value of the remaining unexercised
portion of this Warrant on the date of the consummation of such
Fundamental Transaction or (ii) the positive difference between the
cash per share paid in such Fundamental Transaction minus the then
in effect Exercise Price. “Black Scholes Value” means
the value of the unexercised portion of this Warrant based on the
Black and Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg determined as of the day
immediately prior to consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period
equal to the time between the date of the public announcement of
the applicable Fundamental Transaction and the Termination Date,
(B) an expected volatility equal to the 100 day volatility obtained
from the HVT function on Bloomberg as of the Trading Day
immediately preceding the public announcement of the applicable
Fundamental Transaction, (C) the underlying price per share used in
such calculation shall be the sum of the price per share being
offered in cash, if any, plus the value of any non-cash
consideration, if any, being offered in such Fundamental
Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date. The Company shall
cause any successor entity in a Fundamental Transaction in which
the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the
Company under this Warrant and the other Transaction Documents in
accordance with the provisions of this Section 3(f) pursuant to
written agreements in form and substance reasonably satisfactory to
the Holder and approved by the Holder (without unreasonable delay)
prior to such Fundamental Transaction and shall, at the option of
the Holder, deliver to the Holder in exchange for this Warrant a
security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant which
is exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to
the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise
of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such
shares of capital stock (but taking into account the relative value
of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for
the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and
substance to the Holder. Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Warrant and the
other Transaction Documents referring to the “Company”
shall refer instead to the Successor Entity), and may exercise
every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant and the other
Transaction Documents with the same effect as if such Successor
Entity had been named as the Company herein.
-8-
(g) Calculations.
All calculations under this Section 3 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. For
purposes of this Section 3, the number of shares of Common Stock
deemed to be issued and outstanding as of a given date shall be the
sum of the number of shares of Common Stock (excluding treasury
shares, if any) issued and outstanding.
(h) Notice
to Holder.
(i) Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall
promptly email to the Holder a notice setting forth the Exercise
Price after such adjustment and any resulting adjustment to the
number of Warrant Shares and setting forth a brief statement of the
facts requiring such adjustment. The Holder may supply an email
address to the Company and change such address.
(ii) Notice
to Allow Exercise by Xxxxxx. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, then, in each case, the
Company shall deliver to the Holder at its last address as it shall
appear upon the Warrant Register of the Company, at least 20
calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to
email such notice or any defect therein or in the emailing thereof
shall not affect the validity of the corporate action required to
be specified in such notice. The Holder shall remain entitled to
exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such
notice except as may otherwise be expressly set forth
herein.
Section
4. Transfer
of Warrant.
(a) Transferability.
Subject to compliance with any applicable securities laws and the
provisions of the Purchase Agreement, this Warrant and all rights
hereunder (including, without limitation, any registration rights)
are transferable, in whole or in part, upon surrender of this
Warrant at the principal office of the Company or its designated
agent, 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, as applicable, 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. The Warrant, if properly assigned in accordance
herewith, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.
(b) New
Warrants. 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
4(a), as to any 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. All Warrants issued on
transfers or exchanges shall be dated the initial issuance date of
this Warrant and shall be identical with this Warrant except as to
the number of Warrant Shares issuable pursuant
thereto.
(c) Warrant
Register. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder
hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for
the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.
-9-
Section
5. Miscellaneous.
(a) No
Rights as Stockholder Until Exercise. This Warrant does not
entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof other
than as explicitly set forth in Section 3.
(b) 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, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, 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.
(c) 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 not be a Business Day, then, such action may
be taken or such right may be exercised on the next succeeding
Business Day.
(d) Authorized
Shares.
The Company covenants that, during the period the
Warrant is outstanding, it will reserve from its authorized and
unissued Common Stock, free of preemptive rights, a sufficient
number of shares equal to two
times the number of Warrant Shares issuable under the Purchase
Agreement to all Purchasers thereunder (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation). 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 commercially
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 any Trading
Market upon which the Common Stock may be listed. The Company
covenants that all Warrant Shares which 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 payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and non-assessable and free
from all taxes, liens and charges created by the Company in respect
of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
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
(i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) 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 upon the
exercise of this Warrant and (iii) 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.
Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall use commercially reasonable
efforts to obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.
(e) Jurisdiction.
All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be determined in
accordance with the provisions of the Purchase
Agreement.
(f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered or if not exercised on
a cashless basis when Rule 144 is available, may have restrictions
upon resale imposed by state and federal securities
laws.
-10-
(g) Non-waiver
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 the Holder’s
rights, powers or remedies. Without limiting any other provision of
this Warrant or the Purchase Agreement, if the Company willfully
and knowingly fails to comply with any provision of this Warrant,
which results in any material damages to the Holder, the Company
shall pay to the 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 the Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
(h) 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.
(i) Limitation
of Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the
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.
(j) Remedies.
The 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 and not to assert the
defense in any action for specific performance that a remedy at law
would be adequate or that there is no irreparable harm and not to
require the posting of a bond or other security.
(k) 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 and permitted
assigns of the Company and the successors and permitted assigns of
Holder. The provisions of this Warrant are intended to be for the
benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant
Shares.
(l) Amendment.
This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and Holders of at least a majority of the
outstanding Warrants issued pursuant to the Purchase
Agreement.
(m) 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.
********************
(Signature Page Follows)
-11-
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
|
|
|
By:
/s/ Xxxxx X.
Xxxxxxxxx
Name:
Xxxxx Xxxxxxxxx
Title:
Chief Executive Officer
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|
-12-
NOTICE OF EXERCISE
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of
the Company 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):
[ ] in
lawful money of the United States; or
[ ] [if
permitted] the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number
of Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(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:
_______________________________
(4) After
giving effect to this Notice of Exercise, the undersigned will not
have exceeded the Beneficial Ownership Limitation.
The
Warrant Shares shall be delivered to the following DWAC Account
Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
______________________________________________________________________
Signature of Authorized Signatory of Investing
Entity:
________________________________________________
Name of
Authorized Signatory:
__________________________________________________________________
Title
of Authorized Signatory:
___________________________________________________________________
Date:
_______________________________________________________________________________________
-13-
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, [____] all of or [_______] shares of 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.
-14-
