Exhibit 4.2
NEITHER THIS SECURITY NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY
HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE OFFERED, SOLD, ENCUMBERED OR OTHERWISE TRANSFERRED
("TRANSFERRED") IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. IN THE ABSENCE OF SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE
TRANSFERRED (OTHER THAN TO AN AFFILIATE OR MEMBER OF THE HOLDER HEREOF FOR NO
CONSIDERATION) UNLESS THE COMPANY HAS RECEIVED A WRITTEN OPINION FROM COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSFER IS
BEING MADE IN COMPLIANCE WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
No. W-1 April 7, 2009
WARRANT TO PURCHASE
SHARES OF CAPITAL STOCK
OF
IVIVI TECHNOLOGIES, INC.
This Warrant (the "WARRANT") is to certify that Emigrant Capital Corp.,
a Delaware corporation, or its registered assigns (the "WARRANTHOLDER") is
entitled at any time during the Applicable Exercise Period to purchase, at the
Applicable Exercise Price per share (as modified pursuant to SECTION 4 or 5, as
applicable, through the date of exercise), up to the number of shares of
Applicable Stock of Ivivi Technologies Inc., a New Jersey corporation (the
"COMPANY") determined by dividing the Aggregate Exercise Price divided by the
Applicable Exercise Price. Unless earlier exercised in full and subject to the
conditions set forth herein, this Warrant shall expire at 5:00 P.M., New York
time, on the Applicable Expiration Date.
1. DEFINITIONS. Capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed thereto in the Loan Agreement. The
following terms shall have the meanings ascribed thereto in this SECTION 1:
1.1 "ADDITIONAL SHARES OF COMMON STOCK" shall mean:
(a) as used in SECTION 4.7, all shares of Common
Stock issued (or deemed to be issued pursuant to SECTION 4.7)
by the Company after the Qualified Financing Initial Exercise
Date, other than Permitted Securities; and
(b) as used in SECTION 5.7, all shares of Common
Stock issued (or deemed to be issued pursuant to SECTION 5.7)
by the Company after the Closing Date, other than Permitted
Securities.
1.2 "AGGREGATE EXERCISE PRICE" shall mean $2,500,000;
PROVIDED, HOWEVER, that in the event that the Company shall have
exercised its right to extend the Maturity Date pursuant to the proviso
to the definition of "Maturity Date" set forth in the Note, the
"Aggregate Exercise Price" shall mean $3,000,000; PROVIDED, FURTHER,
that, at any time following the occurrence and during the continuation
of a default by the Warrantholder in its obligations to fund any Loan
required to be funded by the Warrantholder to the Company on any
Advance Date pursuant to the terms of the Loan Agreement, the
"Aggregate Exercise Price" shall mean the aggregate principal amount of
all Loans actually funded by the Warrantholder to the Company pursuant
to the Loan Agreement (without giving effect to any repayment of such
Loans by the Company).
1.3 "APPLICABLE EXERCISE PERIOD" shall mean the Qualified
Financing Exercise Period or Common Stock Exercise Period, as
applicable.
1.4 "APPLICABLE EXERCISE PRICE" shall mean:
(a) with respect to any shares of Qualified Financing
Conversion Stock that are issuable upon exercise of this
Warrant under SECTION 2.1 during the Qualified Financing
Exercise Period, the Qualified Financing Exercise Price; and
(b) with respect to any shares of Common Stock that
are issuable upon exercise of this Warrant during the Common
Stock Exercise Period under SECTION 2.2, the Common Stock
Exercise Price.
1.5 "APPLICABLE EXPIRATION DATE" shall mean:
(a) with respect to the right of the Warrantholder to
exercise this Warrant for shares of Qualified Financing
Conversion Stock under SECTION 2.1, the Qualified Financing
Expiration Date; and
(b) with respect to the right of the Warrantholder to
exercise this Warrant for shares of Common Stock under SECTION
2.2, the Common Stock Expiration Date.
1.6 "APPLICABLE STOCK" shall mean Qualified Financing
Conversion Stock or Common Stock, as applicable.
1.7 "COMMON STOCK EQUIVALENTS" shall mean any stock or
security convertible into or exchangeable for Common Stock and any
right, warrant or option to acquire Common Stock or any such
convertible or exchangeable security.
1.8 "COMMON STOCK EXERCISE PERIOD" shall mean, in the event
that the Company does not consummate a Qualified Financing prior to the
occurrence of the Maturity Date, the period commencing on the Common
Stock Initial Exercise Date through and including the Common Stock
Expiration Date.
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1.9 "COMMON STOCK EXERCISE PRICE" shall mean, as of any date
of determination, the Initial Common Stock Exercise Price as adjusted
pursuant to SECTION 5 through such date of determination.
1.10 "COMMON STOCK EXPIRATION DATE" shall mean July 1, 2014.
1.11 "COMMON STOCK INITIAL EXERCISE DATE" shall mean, solely
in the event that the Company does not consummate a Qualified Financing
prior to the occurrence of the Maturity Date, the Maturity Date.
1.12 "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly
convertible or exercisable into or exchangeable for Common Stock, but
excluding Options.
1.13 "EQUITY FINANCING" shall mean any issuance and sale for
cash of Common Stock or Common Stock Equivalents by the Company
occurring after the date hereof.
1.14 "FAIR MARKET VALUE" shall mean, with respect to any
Applicable Stock as of any date of determination, (i) at any time that
shares of such Applicable Stock are publicly traded on a national
securities exchange or are listed in a national securities market, the
closing price of shares of such Applicable Stock on the trading day
immediately prior to such date of determination, and (ii) at any other
time, the fair market value of shares of such Applicable Stock as
determined in good faith by the Board of Directors of the Company.
1.15 "INITIAL COMMON STOCK EXERCISE PRICE" shall mean an
amount equal to $0.23 per share of Common Stock.
1.16 "INITIAL QUALIFIED FINANCING EXERCISE PRICE" shall mean
with respect to any series or class of Qualified Financing Conversion
Stock, the lowest purchase price per share of such Qualified Financing
Conversion Stock actually paid by the purchasers thereof in the
applicable Qualified Financing.
1.17 "LOAN AGREEMENT" shall mean that certain Loan Agreement,
dated as of April 7, 2009, between the Company and the Warrantholder.
1.18 "MATURITY DATE" shall have the meaning ascribed to such
term in the Note.
1.19 "NOTE" shall mean the Convertible Promissory Note, dated
April 7, 2009, made by the Company in favor of the Warrantholder.
1.20 "OPTIONS" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities.
1.21 "PERMITTED SECURITIES" shall mean (i) this Warrant and
the Note issued pursuant to the Loan Agreeiment, (ii) the Qualified
Financing Conversion Stock issued in connection with the Qualified
Financing, (iii) the shares of Qualified Financing Conversion Stock or
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Common Stock issuable upon the exercise of this Warrant or the
conversion of the Note, (iv) shares of Common Stock issued upon
exercise of Options or Convertible Securities outstanding as of the
Closing Date, and (v) shares of Common Stock and Convertible Securities
and Options issued after the Closing Date pursuant to the Ivivi
Technologies, Inc. 2009 Equity Incentive Plan; PROVIDED that the
aggregate number of shares of Common Stock (calculated on an as
converted into Common Stock basis) that qualify as "Permitted
Securities" pursuant to this CLAUSE (V) that are at any one time
outstanding shall not exceed 3,750,000 (as appropriately adjusted from
time to time as a result of a stock split, stock combination or any
other similar event affecting the outstanding number of shares of
Common Stock).
1.22 "QUALIFIED FINANCING" shall mean the first Equity
Financing (or substantially concurrent Equity Financings) occurring
after the Closing Date which results in gross proceeds to the Company
in an amount at least equal to $5 million (which, for the avoidance of
doubt, shall not include any proceeds arising from the conversion of
the Note); PROVIDED, THAT, in order for any such issuance and sale to
constitute a "Qualified Financing," the Company must receive gross
proceeds from such issuance and sale of at least $3.5 million from one
or more Unaffiliated Persons.
1.23 "QUALIFIED FINANCING CONVERSION STOCK" shall mean, with
respect to a Qualified Financing, the identical class and series of
capital stock of the Company issued and sold in such Qualified
Financing.
1.24 "QUALIFIED FINANCING EXERCISE PERIOD" shall mean, in the
event that the Company consummates a Qualified Financing at any time
prior to or following the occurrence of the Maturity Date, the period
commencing on the Qualified Financing Initial Exercise Date through and
including the Qualified Financing Expiration Date.
1.25 "QUALIFIED FINANCING EXERCISE PRICE" shall mean, as of
any date of determination, the Initial Qualified Financing Exercise
Price as adjusted pursuant to SECTION 4 through such date of
determination.
1.26 "QUALIFIED FINANCING EXPIRATION DATE" shall mean the
fifth anniversary of the Qualified Financing Initial Exercise Date.
1.27 "QUALIFIED FINANCING INITIAL EXERCISE DATE" shall mean
the closing date of the first Qualified Financing occurring after the
Closing Date.
1.28 "SALE EVENT" shall mean (i) the consolidation or merger
of the Company into or with any other entity or entities which results
in the exchange of outstanding shares of the Company for securities or
other consideration issued or paid or caused to be issued or paid by
any such entity or affiliate thereof (other than a merger to
reincorporate the Company in a different jurisdiction or one in which
the holders of capital stock of the Company immediately prior to such
merger or consolidation continue to hold at least 51% by voting power
of the capital stock of the surviving corporation), (ii) any issuance,
sale or transfer (or related issuances, sales or transfers) of shares
of capital stock of the Company by the Company or any holder of such
shares which results in the holders of capital stock of the Company
immediately prior to such issuance, sale or transfer ceasing to
continue to hold at least 51% by
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voting power of the capital stock of the Company following such
issuance, sale or transfer), (iii) the sale, lease, abandonment,
transfer or other disposition by the Company of all or substantially
all its assets or (iv) any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary. Notwithstanding the
provisions of CLAUSE (II) of this definition, in no event shall a
Qualified Financing be deemed to constitute a Sale Event.
1.29 "UNAFFILIATED PERSON" shall mean any Person who is not
any of (i) a holder of capital stock of the Company as of the Closing
Date, (ii) an Affiliate of the Company as of the Closing Date or (iii)
an Affiliate of any of the Persons identified in CLAUSE (I) or (II)
above; PROVIDED, THAT, notwithstanding the foregoing, the Warrantholder
shall be deemed an Unaffiliated Person.
2. EXERCISE OF WARRANT.
2.1 During the Qualified Financing Exercise Period, this
Warrant shall be exercisable by the Warrantholder, at the Qualified
Financing Exercise Price per share of Qualified Financing Conversion
Stock issuable hereunder, for up to such number of shares of Qualified
Financing Conversion Stock as is equal to the Aggregate Exercise Price
divided by the Qualified Financing Exercise Price as of such date of
exercise, payable in cash by wire transfer of immediately available
funds or by certified or official bank check. In lieu of payment of the
Qualified Financing Exercise Price as provided above, the Warrantholder
may elect a cashless net exercise. In the case of such cashless net
exercise, the Warrantholder shall surrender this Warrant for
cancellation and receive in exchange therefor the full number of duly
authorized, validly issued, fully paid and nonassessable shares of
Qualified Financing Conversion Stock specified less the number of
shares of Qualified Financing Conversion Stock with an aggregate Fair
Market Value as of the business day on which the Warrantholder
surrenders this Warrant to the Company equal to the aggregate Qualified
Financing Exercise Price that would have been payable upon such
exercise absent election of the cashless net exercise alternative. Upon
surrender of this Warrant with the appropriate attached Subscription
Form duly completed and executed, together with any required payment of
the Qualified Financing Exercise Price for the shares of the Qualified
Financing Conversion Stock being purchased, at the Company's principal
executive offices, the Warrantholder shall be entitled to receive a
certificate or certificates for the shares of the Qualified Financing
Conversion Stock so purchased. In the event that any approvals of the
stockholders of the Company are required by the Nasdaq Marketplace
Rules in connection with the consummation by the Company of any
Qualified Financing (including with respect to the issuance of any
shares of Qualified Financing Conversion Stock that may become issuable
upon exercise of this Warrant), the Company shall obtain all such
required stockholder approvals in order to permit the issuance in full
of all shares of Qualified Financing Conversion Stock that may become
issuable upon exercise of this Warrant.
2.2 During the Common Stock Exercise Period, this Warrant
shall be exercisable by the Warrantholder, at the Common Stock Exercise
Price per share of Common Stock issuable hereunder, for up to such
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number of shares of Common Stock as is equal to the Aggregate Exercise
Price divided by the Common Stock Exercise Price as of such date of
exercise, payable in cash by wire transfer of immediately available
funds or by certified or official bank check. In lieu of payment of the
Common Stock Exercise Price as provided above, the Warrantholder may
elect a cashless net exercise. In the case of such cashless net
exercise, the Warrantholder shall surrender this Warrant for
cancellation and receive in exchange therefor the full number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock specified less the number of shares of Common Stock with
an aggregate Fair Market Value as of the business day on which the
Warrantholder surrenders this Warrant to the Company equal to the
aggregate Common Stock Exercise Price that would have been payable upon
such exercise absent election of the cashless net exercise alternative.
Upon surrender of this Warrant with the appropriate attached
Subscription Form duly completed and executed, together with any
required payment of the Common Stock Exercise Price for the shares of
the Common Stock being purchased, at the Company's principal executive
offices, the Warrantholder shall be entitled to receive a certificate
or certificates for the shares of the Common Stock so purchased.
2.3 For the avoidance of doubt, in the event that the
Warrantholder shall elect to exercise this Warrant at any time that
comprises a portion of both the Qualified Financing Exercise Period and
the Common Stock Exercise Period, the Warrantholder shall have the
right to elect whether this Warrant is being exercised under either
SECTION 2.1 or 2.2 and shall set forth such election on the
Subscription Form delivered by the Warrantholder in connection with
such exercise.
2.4 The purchase rights represented by this Warrant are
exercisable at the option of the Warrantholder, in whole or in part, at
any time and from time to time during the Applicable Exercise Period.
2.5 In the case of an exercise of this Warrant for the
purchase of less than all the shares of the Applicable Stock
purchasable under this Warrant, the Company shall cancel this Warrant
upon the surrender hereof and shall, as soon as practicable, execute
and deliver to the Warrantholder a new Warrant to the Warrantholder of
like tenor for the balance of this Warrant not so exercised.
2.6 Notwithstanding any other provision of this Warrant, if
the exercise of all or any portion of this Warrant is to be made in
connection with a registered public offering, a sale of the Company or
any other transaction or event, such exercise may, at the election of
the Warrantholder, be conditioned upon consummation of such transaction
or event in which case such exercise shall not be deemed effective
until the consummation of such transaction or event and the
satisfaction by the Warrantholder of all the conditions to such
exercise set forth herein.
3. ISSUANCE OF STOCK CERTIFICATES.
3.1 The issuance of certificates for shares of Applicable
Stock upon the exercise of this Warrant shall be made as soon as
practicable thereafter or in any event within five (5) Business Days of
such exercise without charge to the Warrantholder, including, without
limitation, any tax that may be payable in respect thereof, and such
certificates shall (subject to the provisions of this
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SECTION 3) be issued in the name of, or in such names as may be directed by, the
Warrantholder on the Subscription Form; provided, HOWEVER, that the Company
shall not be required to pay any income tax to which the Warrantholder may be
subject in connection with the issuance of this Warrant or of shares of
Applicable Stock upon the exercise of this Warrant; PROVIDED, FURTHER, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate in a
name other than that of the Warrantholder.
3.2 All shares of Applicable Stock issued upon the exercise of
this Warrant shall be validly issued, fully paid and nonassessable. The
Company shall not be required upon exercise of this Warrant to issue
any fractional shares. In lieu of any fractional shares to which the
Warrantholder would otherwise be entitled, the Company shall, at its
option, either (i) pay cash equal to such fraction multiplied by the
Fair Market Value per share of the Applicable Stock or (ii) round up to
the next whole share of Common Stock.
3.3 Notwithstanding anything contained herein to the contrary,
if the Warrantholder directs the Company to deliver a certificate for
the Applicable Stock in a name other than that of the Warrantholder (or
any of its Affiliates or members to which such Applicable Stock is
assigned for no consideration), it shall deliver to the Company upon
exercise of this Warrant an opinion of counsel reasonably satisfactory
to the Company to the effect that the issuance of such Applicable Stock
in such other name may be made pursuant to an available exemption from
the registration requirements of the Securities Act of 1933, as
amended, and all applicable state securities laws. Each Person in whose
name any such certificate for shares of Applicable Stock is issued
shall for all purposes be deemed to have become the holder of record of
such shares on the date on which the Warrant was surrendered and
payment of the Applicable Exercise Price and any applicable taxes was
made, irrespective of the date of delivery of such certificate, except
that, if the date of such surrender and payment is a date when the
stock transfer books of the Company are closed, such Person shall be
deemed to have become the holder of such shares at the close of
business on the next succeeding date on which the stock transfer books
are open.
4. ADJUSTMENT OF QUALIFIED FINANCING EXERCISE PRICE.
4.1 STOCK SPLITS AND COMBINATIONS. If the Company shall at any
time or from time to time during the Qualified Financing Exercise
Period effect a subdivision (by any stock split, stock dividend or
otherwise) of the outstanding shares of Qualified Financing Conversion
Stock, the Qualified Financing Exercise Price then in effect
immediately before that subdivision shall be proportionately decreased.
If the Company shall at any time or from time to time on or after the
Qualified Financing Initial Exercise Date combine the outstanding
shares of the Qualified Financing Conversion Stock, the Qualified
Financing Exercise Price then in effect immediately before the
combination shall be proportionately increased. Any adjustment under
this paragraph shall become effective at the close of business on the
date the subdivision or combination becomes effective.
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4.2 QUALIFIED FINANCING CONVERSION STOCK DIVIDENDS. In the
event the Company at any time or from time to time during the Qualified
Financing Exercise Period shall make or issue, or fix a record date for
the determination of holders of Qualified Financing Conversion Stock
entitled to receive, a dividend or other distribution payable in
additional shares of Qualified Financing Conversion Stock, then and in
each such event the Qualified Financing Exercise Price then in effect
shall be decreased as of the time of such issuance or, in the event
such a record date shall have been fixed, as of the close of business
on such record date, by multiplying the Qualified Financing Exercise
Price then in effect by a fraction:
(a) the numerator of which shall be the total number
of shares of Qualified Financing Conversion Stock issued and
outstanding immediately prior to the time of such issuance or
the close of business on such record date, and
(b) the denominator of which shall be the total
number of shares of Qualified Financing Conversion Stock
issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the
number of shares of Qualified Financing Conversion Stock
issuable in payment of such dividend or distribution.
4.3 OTHER STOCK DIVIDENDS. In the event the Company at any
time or from time to time during the Qualified Financing Exercise
Period shall make or issue, or fix a record date for the determination
of holders of any Qualified Financing Conversion Stock entitled to
receive, a dividend or other distribution payable in securities of the
Company other than shares of such Qualified Financing Conversion Stock,
then and in each such event provision shall be made so that the
Warrantholder shall receive upon any exercise of this Warrant into
shares of such Qualified Financing Conversion Stock, in addition to the
number of shares of such Qualified Financing Conversion Stock
receivable thereupon, the amount of securities of the Company that they
would have received had this Warrant been exercised for such shares of
Qualified Financing Conversion Stock on the date of such event and had
they thereafter, during the period from the date of such event to and
including the exercise date, retained such securities receivable by
them as aforesaid during such period, giving application to all
adjustments called for during such period under this SECTION 4.
4.4 REORGANIZATION, RECLASSIFICATION, ETC. If, at any time or
from time to time during the Qualified Financing Exercise Period, any
class or series of Qualified Financing Conversion Stock issuable upon
exercise of this Warrant shall be changed into the same or a different
number of shares of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation, or sale of assets
provided for below), then and in each such event the Warrantholder
shall, in addition to the other exercise rights set forth herein, have
the right thereafter to exercise this Warrant into the kind and amount
of shares of stock and other securities and property receivable upon
such reorganization, reclassification, or other change, by holders of
the number of shares of such class or series of Qualified Financing
Conversion Stock into which this Warrant might have been exercised
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immediately prior to such reorganization, reclassification, or change,
all subject to further adjustment as provided herein.
4.5 MERGER OR CONSOLIDATION. In case of any consolidation or
merger of the Company with or into another corporation or the sale of
all or substantially all of the assets of the Company to another
corporation, at any time or from time to time during the Qualified
Financing Exercise Period, this Warrant shall thereafter be exercisable
(or shall be converted into a security which shall be so exercisable)
into the kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Qualified
Financing Conversion Stock into which this Warrant is then exercisable
would have been entitled upon such consolidation, merger or sale; and,
in such case, appropriate adjustment (as determined in good faith by
the Board of Directors of the Company) shall be made in the application
of the provisions in this SECTION 4 set forth with respect to the
rights and interest thereafter of the Warrantholder, to the extent that
the provisions set forth in this SECTION 4 (including provisions with
respect to changes in and other adjustments of the Qualified Financing
Conversion Stock) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the exercise of this Warrant.
4.6 EXTRAORDINARY TRANSACTIONS. In case at any time or from
time to time during the Qualified Financing Exercise Period (i) the
Company shall declare any dividend upon any class or series of
Qualified Financing Conversion Stock payable in cash or stock or make
any other distribution to the holders of any class or series of
Qualified Financing Conversion Stock, (ii) the Company shall offer for
subscription pro rata to the holders of any class or series of
Qualified Financing Conversion Stock any additional shares of stock of
any class or other rights, (iii) there shall be any capital
reorganization or reclassification of the capital stock of the Company,
or (iv) or a Sale Event shall occur; then, in any one or more of said
cases, the Company shall give, by first class mail, postage prepaid, or
by facsimile, addressed to the Warrantholder, (A) at least 20 days'
prior written notice of the date on which the books of the Company
shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of
any such reorganization, reclassification, or Sale Event and (B) in the
case of any such reorganization, reclassification or Sale Event, at
least 20 days' prior written notice of the date when the same shall
take place. Such notice in accordance with the foregoing CLAUSE (A)
shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of such class or
series of Qualified Financing Conversion Stock shall be entitled
thereto and such notice in accordance with the foregoing CLAUSE (B)
shall also specify the date or projected date on which the holders of
such class or series of Qualified Financing Conversion Stock shall be
entitled to exchange their shares of such class or series of Qualified
Financing Conversion Stock for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, as the case may be.
4.7 ADJUSTMENTS TO QUALIFIED FINANCING EXERCISE PRICE FOR
CERTAIN DILUTIVE ISSUANCES IN THE EVENT THAT THE QUALIFIED FINANCING
CONVERSION STOCK IS COMMON STOCK. The provisions of this SECTION 4.7,
and the adjustments to the Qualified Financing Exercise Price provided
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for in this SECTION 4.7, shall only apply in the instance that the
Qualified Financing Conversion Stock issued in the Qualified Financing
is Common Stock. In the event that the Qualified Financing Conversion
Stock issued in the Qualified Financing is not Common Stock, then the
provisions of this Section 4.7 shall cease to be of effect.
(a) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK.
(i) Except for the issuance of Permitted Securities,
if the Company at any time or from time to time during the
Qualified Financing Exercise Period shall issue any Options or
Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled
to receive any such Options or Convertible Securities, then
the maximum number of shares of Common Stock (as set forth in
the instrument relating thereto, assuming the satisfaction of
any conditions to exercisability, convertibility or
exchangeability but without regard to any provision contained
therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed for
purposes of this SECTION 4.7 to be Additional Shares of Common
Stock issued as of the time of such issue or, in case such a
record date shall have been fixed, as of the close of business
on such record date. Notwithstanding the foregoing, except as
otherwise provided in CLAUSE (II) below, in the event that an
adjustment to the Qualified Financing Exercise Price is made
upon the issuance of any such Options or Convertible
Securities, then no further adjustment of the Qualified
Financing Exercise Price shall be made upon the actual
issuance of Common Stock upon exercise of such Options or upon
the actual issuance of Common Stock upon conversion or
exchange of such Convertible Securities.
(ii) If the terms of any Option or Convertible
Security, the issuance of which resulted in an adjustment to
the Qualified Financing Exercise Price pursuant to the terms
of CLAUSE (B) below, are revised (either automatically
pursuant to the provisions contained therein or as a result of
an amendment to such terms) to provide for either (1) any
increase or decrease in the number of shares of Common Stock
issuable upon the exercise, conversion or exchange of any such
Option or Convertible Security or (2) any increase or decrease
in the consideration payable to the Company upon such
exercise, conversion or exchange, then, effective upon such
increase or decrease becoming effective, the Qualified
Financing Exercise Price computed upon the original issue of
such Option or Convertible Security (or upon the occurrence of
a record date with respect thereto) shall be readjusted to
such Qualified Financing Exercise Price as would have obtained
had such revised terms been in effect upon the original date
of issuance of such Option or Convertible Security.
Notwithstanding the foregoing, no adjustment pursuant to this
CLAUSE (II) shall have the effect of increasing the Qualified
Financing Exercise Price to an amount which exceeds the lower
of (x) the Qualified Financing Exercise Price on the original
adjustment date, or (y) the Qualified Financing Exercise Price
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that would have resulted from any issuances of Additional
Shares of Common Stock between the original adjustment date
and such readjustment date.
(iii) If the terms of any Option or Convertible
Security, the issuance of which did not result in an
adjustment to the Qualified Financing Exercise Price pursuant
to the terms of CLAUSE (B) below (either because the
consideration per share of the Additional Shares of Common
Stock subject thereto was equal to or greater than the
Qualified Financing Exercise Price then in effect, or because
such Option or Convertible Security was issued before the
Qualified Financing Initial Exercise Date), are revised after
the Closing Date (either automatically pursuant to the
provisions contained therein or as a result of an amendment to
such terms) to provide for either (1) any increase or decrease
in the number of shares of Common Stock issuable upon the
exercise, conversion or exchange of any such Option or
Convertible Security or (2) any increase or decrease in the
consideration payable to the Company upon such exercise,
conversion or exchange, then such Option or Convertible
Security, as so amended, and the Additional Shares of Common
Stock subject thereto shall be deemed to have been issued
effective upon such increase or decrease becoming effective.
(iv) Upon the expiration or termination of any
unexercised Option or unconverted or unexchanged Convertible
Security which resulted (either upon its original issuance or
upon a revision of its terms) in an adjustment to the
Qualified Financing Exercise Price pursuant to the terms of
CLAUSE (B) below, the Qualified Financing Exercise Price shall
be readjusted to such Qualified Financing Exercise Price as
would have obtained had such Option or Convertible Security
never been issued.
(b) ADJUSTMENT OF QUALIFIED FINANCING EXERCISE PRICE UPON
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event the Company
shall at any time after the Qualified Financing Initial Exercise Date
issue Additional Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to CLAUSE (A) above), without
consideration or for a consideration per share less than the applicable
Qualified Financing Exercise Price in effect immediately prior to such
issue, then the Qualified Financing Exercise Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest
one-hundredth of a cent) determined in accordance with the following
formula:
EP2 = EP1 * (A + B) / (A + C)
For purposes of the foregoing formula, the following definitions shall
apply:
"EP2" shall mean the Qualified Financing Exercise Price in
effect immediately after such issue of Additional
Shares of Common Stock;
11
"EP1" shall mean the Qualified Financing Exercise Price in
effect immediately prior to such issue of Additional
Shares of Common Stock;
"A" shall mean the number of shares of Common Stock
outstanding and deemed outstanding immediately prior
to such issue of Additional Shares of Common Stock
(treating for this purpose as outstanding all shares
of Common Stock issuable upon exercise of Options
outstanding immediately prior to such issue or upon
conversion of Convertible Securities outstanding
immediately prior to such issue);
"B" shall mean the number of shares of Common Stock that
would have been issued if such Additional Shares of
Common Stock had been issued at a price per share
equal to EP1 (determined by dividing the aggregate
consideration received or receivable by the Company
in respect of such issue by EP1); and
"C" shall mean the number of such Additional Shares of
Common Stock issued in such transaction.
(c) DETERMINATION OF CONSIDERATION. For purposes of this
SECTION 4.7, the consideration received or receivable by the Company
for the issue or deemed issue of any Additional Shares of Common Stock
shall be computed as follows:
(i) CASH AND PROPERTY: The consideration per share
received or receivable by the Company for the issue of
Additional Shares of Common Stock shall:
(1) insofar as it consists of cash,
be computed at the aggregate amount of cash
received by the Company, excluding amounts
paid or payable for accrued interest;
(2) insofar as it consists of
securities and the value of such securities
is not determinable by reference to a
separate agreement, (A) if the securities
are then traded on a securities exchange or
the Nasdaq Stock Market, then the value
shall be computed based on the average of
the closing prices of the securities on such
securities exchange or Nasdaq Stock Market
over the thirty (30) day period ending on
the date of receipt by the Company, (B) if
the securities are actively traded
over-the-counter, then the value shall be
computed based on the average of the closing
prices over the thirty (30) day ending on
the date of receipt by the Company, and (C)
if there is no active public market, then
the value shall be computed based on the
fair market value thereof on the date of
receipt by the Company, as determined in
good faith by the Board of Directors of the
Company;
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(3) insofar as it consists of
property other than cash or securities, be
computed at the fair market value thereof at
the time of such issue, as determined in
good faith by the Board of Directors of the
Company; and
(4) in the event Additional Shares
of Common Stock are issued together with
other shares or securities or other assets
of the Company for consideration which
covers both, be the proportion of such
consideration so received, computed as
provided in CLAUSES (1), (2) and (3) above,
as determined in good faith by the Board of
Directors of the Company.
(ii) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received or receivable by the Company
for Additional Shares of Common Stock deemed to have been
issued pursuant to this SECTION 4.7, relating to Options and
Convertible Securities, shall be determined by dividing:
(1) the total amount, if any,
received or receivable by the Company as
consideration for the issue of such Options
or Convertible Securities, plus the minimum
aggregate amount of additional consideration
(as set forth in the instruments relating
thereto, without regard to any provision
contained therein for a subsequent
adjustment of such consideration) payable to
the Company upon the exercise of such
Options or the conversion or exchange of
such Convertible Securities, or in the case
of Options for Convertible Securities, the
exercise of such Options for Convertible
Securities and the conversion or exchange of
such Convertible Securities, by
(2) the maximum number of shares of
Common Stock (as set forth in the
instruments relating thereto, without regard
to any provision contained therein for a
subsequent adjustment of such number)
issuable upon the exercise of such Options
or the conversion or exchange of such
Convertible Securities.
(d) MULTIPLE CLOSING DATES. In the event the Company
shall issue on more than one date Additional Shares of Common
Stock that are a part of one transaction or a series of
related transactions and that would result in an adjustment to
the Qualified Financing Exercise Price pursuant to the terms
of this SECTION 4.7 then, upon the final such issuance, the
Qualified Financing Exercise Price shall be readjusted to give
effect to all such issuances as if they occurred on the date
of the first such issuance (and without additional giving
effect to any adjustments as a result of any subsequent
issuances within such period).
4.8 CALCULATIONS. No adjustment in the Qualified Financing
Exercise Price shall be required unless such adjustment would require
upon increase or decrease of a least one-tenth of a cent ($0.001) in
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such Qualified Financing Exercise Price; PROVIDED, however, that any
adjustments which by reason of this SECTION 4.8 are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this SECTION 4 shall be made to the
nearest one-tenth of a cent or the nearest 1/100th of a share, as
applicable. The number of shares of Qualified Financing Conversion
Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Qualified Financing
Conversion Stock.
4.9 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Qualified Financing Exercise Price
pursuant to this SECTION 4, the Company at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms
hereof and furnish to the Warrantholder a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based. The Company shall, upon
the written request at any time of the Warrantholder, furnish or cause
to be furnished to such holder a similar certificate setting forth (i)
such adjustments and readjustments, (ii) the Qualified Financing
Exercise Price then in effect, and (iii) the number of shares of
Qualified Financing Conversion Stock into which this Warrant is
exercisable and the amount, if any, of other property which then would
be received upon the exercise of this Warrant.
5. ADJUSTMENT OF COMMON STOCK EXERCISE PRICE.
5.1 STOCK SPLITS AND COMBINATIONS. If the Company shall at any
time or from time to time on or after the Closing Date effect a
subdivision (by any stock split, stock dividend or otherwise) of the
outstanding shares of Common Stock, the Common Stock Exercise Price
then in effect immediately before that subdivision shall be
proportionately decreased. If the Company shall at any time or from
time to time on or after the Closing Date combine the outstanding
shares of the Common Stock, the Common Stock Exercise Price then in
effect immediately before the combination shall be proportionately
increased. Any adjustment under this paragraph shall become effective
at the close of business on the date the subdivision or combination
becomes effective.
5.2 COMMON STOCK DIVIDENDS. In the event the Company at any
time or from time to time on or after the Closing Date shall make or
issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the
Common Stock Exercise Price then in effect shall be decreased as of the
time of such issuance or, in the event such a record date shall have
been fixed, as of the close of business on such record date, by
multiplying the Common Stock Exercise Price then in effect by a
fraction:
(a) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on
such record date, and
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(b) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of
Common Stock issuable in payment of such dividend or
distribution.
5.3 OTHER STOCK DIVIDENDS. In the event the Company at any
time or from time to time on or after the Closing Date shall make or
issue, or fix a record date for the determination of holders of any
Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Company other than shares of such Common
Stock, then and in each such event provision shall be made so that the
Warrantholder shall receive upon any exercise of this Warrant into
shares of such Common Stock, in addition to the number of shares of
such Common Stock receivable thereupon, the amount of securities of the
Company that they would have received had this Warrant been exercised
for such shares of Common Stock on the date of such event (regardless
of whether or not this Warrant is then exercisable into shares of
Common Stock) and had they thereafter, during the period from the date
of such event to and including the exercise date, retained such
securities receivable by them as aforesaid during such period, giving
application to all adjustments called for during such period under this
SECTION 5.
5.4 REORGANIZATION, RECLASSIFICATION, ETC. If, at any time or
from time to time on or after the Closing Date, any Common Stock
issuable upon exercise of this Warrant (regardless of whether or not
this Warrant is then exercisable into shares of Common Stock) shall be
changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification,
or otherwise (other than a subdivision or combination of shares or
stock dividend provided for above, or a reorganization, merger,
consolidation, or sale of assets provided for below), then and in each
such event the Warrantholder shall, in addition to the other exercise
rights set forth herein, have the right thereafter to exercise this
Warrant into the kind and amount of shares of stock and other
securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares
of such Common Stock into which this Warrant might have been exercised
immediately prior to such reorganization, reclassification, or change
(regardless of whether or not this Warrant is then exercisable into
shares of Common Stock), all subject to further adjustment as provided
herein.
5.5 MERGER OR CONSOLIDATION. In case of any consolidation or
merger of the Company with or into another corporation or the sale of
all or substantially all of the assets of the Company to another
corporation, at any time or from time to time on or after the Closing
Date, this Warrant shall thereafter be exercisable (or shall be
converted into a security which shall be so exercisable) into the kind
and amount of shares of stock or other securities or property to which
a holder of the number of shares of Common Stock into which this
Warrant is exercisable (regardless of whether or not this Warrant is
then exercisable into shares of Common Stock) would have been entitled
upon such consolidation, merger or sale; and, in such case, appropriate
adjustment (as determined in good faith by the Board of Directors of
the Company) shall be made in the application of the provisions in this
SECTION 5 set forth with respect to the rights and interest thereafter
of the Warrantholder, to the extent that the provisions set forth in
this SECTION 5 (including provisions with respect to changes in and
15
other adjustments of the Common Stock) shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or
other property thereafter deliverable upon the exercise of this
Warrant.
5.6 EXTRAORDINARY TRANSACTIONS. In case at any time or from
time to time on or after the Common Stock Initial Exercise Date (i) the
Company shall declare any dividend upon any Common Stock payable in
cash or stock or make any other distribution to the holders of any
Common Stock, (ii) the Company shall offer for subscription pro rata to
the holders of any Common Stock any additional shares of stock of any
class or other rights, (iii) there shall be any capital reorganization
or reclassification of the capital stock of the Company, or (iv) or a
Sale Event shall occur; then, in any one or more of said cases, the
Company shall give, by first class mail, postage prepaid, or by
facsimile, addressed to the Warrantholder, (A) at least 20 days' prior
written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of any
such reorganization, reclassification, or Sale Event and (B) in the
case of any such reorganization, reclassification or Sale Event, at
least 20 days' prior written notice of the date when the same shall
take place. Such notice in accordance with the foregoing CLAUSE (A)
shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of such Common Stock
shall be entitled thereto and such notice in accordance with the
foregoing CLAUSE (B) shall also specify the date or projected date on
which the holders of such Common Stock shall be entitled to exchange
their shares of such Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may
be.
5.7 ADJUSTMENTS TO COMMON STOCK EXERCISE PRICE FOR CERTAIN
DILUTIVE ISSUANCES.
(a) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON
STOCK.
(i) Except for the issuance of Permitted
Securities, if the Company at any time or from time
to time after the Closing Date shall issue any
Options or Convertible Securities or shall fix a
record date for the determination of holders of any
class of securities entitled to receive any such
Options or Convertible Securities, then the maximum
number of shares of Common Stock (as set forth in the
instrument relating thereto, assuming the
satisfaction of any conditions to exercisability,
convertibility or exchangeability but without regard
to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise
of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be
deemed for purposes of this SECTION 5.7 to be
Additional Shares of Common Stock issued as of the
time of such issue or, in case such a record date
shall have been fixed, as of the close of business on
such record date. Notwithstanding the foregoing,
except as otherwise provided in CLAUSE (II) below, in
16
the event that an adjustment to the Common Stock
Exercise Price is made upon the issuance of any such
Options or Convertible Securities, then no further
adjustment of the Common Stock Exercise Price shall
be made upon the actual issuance of Common Stock upon
exercise of such Options or upon the actual issuance
of Common Stock upon conversion or exchange of such
Convertible Securities.
(ii) If the terms of any Option or
Convertible Security, the issuance of which resulted
in an adjustment to the Common Stock Exercise Price
pursuant to the terms of CLAUSE (B) below, are
revised (either automatically pursuant to the
provisions contained therein or as a result of an
amendment to such terms) to provide for either (1)
any increase or decrease in the number of shares of
Common Stock issuable upon the exercise, conversion
or exchange of any such Option or Convertible
Security or (2) any increase or decrease in the
consideration payable to the Company upon such
exercise, conversion or exchange, then, effective
upon such increase or decrease becoming effective,
the Common Stock Exercise Price computed upon the
original issue of such Option or Convertible Security
(or upon the occurrence of a record date with respect
thereto) shall be readjusted to such Common Stock
Exercise Price as would have obtained had such
revised terms been in effect upon the original date
of issuance of such Option or Convertible Security.
Notwithstanding the foregoing, no adjustment pursuant
to this CLAUSE (ii) shall have the effect of
increasing the Common Stock Exercise Price to an
amount which exceeds the lower of (x) the Common
Stock Exercise Price on the original adjustment date,
or (y) the Common Stock Exercise Price that would
have resulted from any issuances of Additional Shares
of Common Stock between the original adjustment date
and such readjustment date.
(iii) If the terms of any Option or
Convertible Security, the issuance of which did not
result in an adjustment to the Common Stock Exercise
Price pursuant to the terms of CLAUSE (B) below
(either because the consideration per share of the
Additional Shares of Common Stock subject thereto was
equal to or greater than the Common Stock Exercise
Price then in effect, or because such Option or
Convertible Security was issued before the Closing
Date), are revised after the Closing Date (either
automatically pursuant to the provisions contained
therein or as a result of an amendment to such terms)
to provide for either (1) any increase or decrease in
the number of shares of Common Stock issuable upon
the exercise, conversion or exchange of any such
Option or Convertible Security or (2) any increase or
decrease in the consideration payable to the Company
upon such exercise, conversion or exchange, then such
Option or Convertible Security, as so amended, and
the Additional Shares of Common Stock subject thereto
shall be deemed to have been issued effective upon
such increase or decrease becoming effective.
(iv) Upon the expiration or termination of
any unexercised Option or unconverted or unexchanged
Convertible Security which resulted (either upon its
original issuance or upon a revision of its terms) in
an adjustment to the Common Stock Exercise Price
pursuant to the terms of CLAUSE (B) below, the Common
17
Stock Exercise Price shall be readjusted to such
Common Stock Exercise Price as would have obtained
had such Option or Convertible Security never been
issued.
(b) ADJUSTMENT OF COMMON STOCK EXERCISE PRICE UPON
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event
the Company shall at any time after the Closing Date issue
Additional Shares of Common Stock (including Additional Shares
of Common Stock deemed to be issued pursuant to CLAUSE (A)
above), without consideration or for a consideration per share
less than the applicable Common Stock Exercise Price in effect
immediately prior to such issue, then the Common Stock
Exercise Price shall be reduced, concurrently with such issue,
to a price (calculated to the nearest one-hundredth of a cent)
determined in accordance with the following formula:
EP2 = EP1 * (A + B) / (A + C)
For purposes of the foregoing formula, the following definitions shall
apply:
"EP2" shall mean the Common Stock Exercise Price
in effect immediately after such issue of
Additional Shares of Common Stock;
"EP1" shall mean the Common Stock Exercise Price
in effect immediately prior to such issue of
Additional Shares of Common Stock;
"A" shall mean the number of shares of Common
Stock outstanding and deemed outstanding
immediately prior to such issue of
Additional Shares of Common Stock (treating
for this purpose as outstanding all shares
of Common Stock issuable upon exercise of
Options outstanding immediately prior to
such issue or upon conversion of Convertible
Securities outstanding immediately prior to
such issue);
"B" shall mean the number of shares of Common
Stock that would have been issued if such
Additional Shares of Common Stock had been
issued at a price per share equal to EP1
(determined by dividing the aggregate
consideration received or receivable by the
Company in respect of such issue by EP1);
and
"C" shall mean the number of such Additional
Shares of Common Stock issued in such
transaction.
(c) DETERMINATION OF CONSIDERATION. For purposes of
this SECTION 5.7, the consideration received or receivable by
the Company for the issue or deemed issue of any Additional
Shares of Common Stock shall be computed as follows:
18
(i) CASH AND PROPERTY: The consideration per
share received or receivable by the Company for the
issue of Additional Shares of Common Stock shall:
(1) insofar as it consists of cash,
be computed at the aggregate amount of cash
received or receivable by the Company,
excluding amounts paid or payable for
accrued interest;
(2) insofar as it consists of
securities and the value of such securities
is not determinable by reference to a
separate agreement, (A) if the securities
are then traded on a securities exchange or
the Nasdaq Stock Market, then the value
shall be computed based on the average of
the closing prices of the securities on such
securities exchange or Nasdaq Stock Market
over the thirty (30) day period ending on
the date of receipt by the Company, (B) if
the securities are actively traded
over-the-counter, then the value shall be
computed based on the average of the closing
prices over the thirty (30) day ending on
the date of receipt by the Company, and (C)
if there is no active public market, then
the value shall be computed based on the
fair market value thereof on the date of
receipt by the Company, as determined in
good faith by the Board of Directors of the
Company;
(3) insofar as it consists of
property other than cash or securities, be
computed at the fair market value thereof at
the time of such issue, as determined in
good faith by the Board of Directors of the
Company; and
(4) in the event Additional Shares
of Common Stock are issued together with
other shares or securities or other assets
of the Company for consideration which
covers both, be the proportion of such
consideration so received, computed as
provided in CLAUSES (1), (2) and (3) above,
as determined in good faith by the Board of
Directors of the Company.
(ii) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received or receivable by the
Company for Additional Shares of Common Stock deemed
to have been issued pursuant to this SECTION 5.7,
relating to Options and Convertible Securities, shall
be determined by dividing:
(1) the total amount, if any,
received or receivable by the Company as
consideration for the issue of such Options
or Convertible Securities, plus the minimum
aggregate amount of additional consideration
(as set forth in the instruments relating
thereto, without regard to any provision
contained therein for a subsequent
adjustment of such consideration) payable to
19
the Company upon the exercise of such
Options or the conversion or exchange of
such Convertible Securities, or in the case
of Options for Convertible Securities, the
exercise of such Options for Convertible
Securities and the conversion or exchange of
such Convertible Securities, by
(2) the maximum number of shares of
Common Stock (as set forth in the
instruments relating thereto, without regard
to any provision contained therein for a
subsequent adjustment of such number)
issuable upon the exercise of such Options
or the conversion or exchange of such
Convertible Securities.
(d) MULTIPLE CLOSING DATES. In the event the
Company shall issue on more than one date Additional
Shares of Common Stock that are a part of one
transaction or a series of related transactions and
that would result in an adjustment to the Common
Stock Exercise Price pursuant to the terms of this
SECTION 5.7 then, upon the final such issuance, the
Common Stock Exercise Price shall be readjusted to
give effect to all such issuances as if they occurred
on the date of the first such issuance (and without
additional giving effect to any adjustments as a
result of any subsequent issuances within such
period).
5.8 ACKNOWLEDGEMENT AS TO ADJUSTMENTS. The Company hereby acknowledges
that an event requiring an adjustment to the Common Stock Exercise Price
pursuant to this SECTION 5 may occur at any time following the Closing Date,
regardless of whether or not the Common Stock Initial Exercise Date shall have
yet occurred. Accordingly, with respect to any exercise of this Warrant into
Common Stock following the occurrence of the Common Stock Initial Exercise Date,
the calculation of the applicable Common Stock Exercise Price in respect of such
exercise shall be calculated after giving effect to any event requiring an
adjustment to the Common Stock Exercise Price pursuant to this SECTION 5 that
shall have occurred at any time from and after the Closing Date.
5.9 CALCULATIONS. No adjustment in the Common Stock Exercise Price
shall be required unless such adjustment would require upon increase or decrease
of a least one-tenth of a cent ($0.001) in such Common Stock Exercise Price;
PROVIDED, however, that any adjustments which by reason of this SECTION 4.9 are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this SECTION 5 shall be made to
the nearest one-tenth of a cent or the nearest 1/100th of a share, as
applicable. 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, and
the disposition of any such shares shall be considered an issue or sale of
Common Stock.
5.10 CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Common Stock Exercise Price pursuant to this
SECTION 5, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to the
20
Warrantholder a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Company shall, upon the written request at any time of the Warrantholder,
furnish or cause to be furnished to such holder a similar certificate setting
forth (i) such adjustments and readjustments, (ii) the Common Stock Exercise
Price then in effect, and (iii) the number of shares of Common Stock into which
this Warrant is exercisable and the amount, if any, of other property which then
would be received upon the exercise of this Warrant.
6. EXCHANGE, LOSS OF WARRANT.
6.1 On surrender for exchange of this Warrant, or any Warrant
issued upon subdivision, exercise, or permitted transfer in whole or in
part of this Warrant, properly endorsed, to the Company, the Company at
its expense will issue and deliver to or on the order of the holder
thereof a new Warrant or Warrants of like tenor, in the name of such
holder or as such holder (on payment by such holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or
faces thereof for the Aggregate Exercise Price called for on the face
or faces of the Warrant or Warrants so surrendered.
6.2 Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant,
and of indemnity reasonably satisfactory to the Company, if lost,
stolen or destroyed, and upon surrender of this Warrant, if mutilated,
the Company shall execute and deliver to the Holder a new Warrant of
like tenor.
7. RESERVATION AND AUTHORIZATION OF SHARES.
7.1 If the Qualified Financing Initial Exercise Date shall
occur, from and after the Qualified Financing Initial Exercise Date,
the Company will cause to be reserved and kept available out of its
authorized and unissued shares of Qualified Financing Conversion Stock
the number of whole shares of such Qualified Financing Conversion Stock
sufficient to permit the exercise in full of this Warrant.
7.2 If the Common Stock Initial Exercise Date shall occur,
from and after the Common Stock Initial Exercise Date, the Company will
cause to be reserved and kept available out of its authorized and
unissued shares of Common Stock the number of whole shares of such
Common Stock sufficient to permit the exercise in full of this Warrant.
7.3 The Company will not, by amendment of its charter or
through 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. Without limiting the generality of the
foregoing, the Company will (a) not increase the par value of any
shares of Applicable Stock issuable upon the exercise of this Warrant
and (b) take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Applicable Stock upon the exercise of this
Warrant.
21
8. RIGHTS OF WARRANTHOLDER.
8.1 This Warrant shall not entitle the holder thereof to any
voting rights or other rights of a stockholder of the Company.
8.2 The Company may deem and treat the Person in whose name
this Warrant is registered with it as the absolute owner for all
purposes whatsoever (notwithstanding any notation of ownership or other
writing thereon made by anyone other than the Company) and the Company
shall not be affected by any notice to the contrary. The terms
"Warrantholder" and "holder of the Warrant" and all other similar terms
used herein shall mean only such Person(s) in whose name(s) this
Warrant is properly registered on the Company's books.
9. NOTICES. All notices or other communications to be given hereunder
shall be in writing and sent in accordance with the Loan Agreement.
10. SUCCESSORS. All the covenants, agreements, representations and
warranties contained in this Warrant shall bind the parties hereto and their
respective heirs, executors, administrators, distributees, successors and
permitted assigns.
11. HEADINGS. The Section headings in this Warrant have been inserted
for purposes of convenience only and shall have no substantive effect.
12. LAW GOVERNING. This Warrant shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction. The Company and the Warrantholder hereby submits to the
exclusive jurisdiction of the United States federal and state courts located in
the State of New York with respect to any dispute arising under this Agreement
or the transactions contemplated hereby or thereby.
13. REMEDIES. The Company stipulates that the remedies at law of the
Warrantholder in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
14. AMENDMENTS. No provision of this Warrant may be changed, modified,
waived or released, unless it is in writing and signed by the Company and the
Warrantholder. No waiver of any term, condition or provision of this Warrant, in
any one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision.
[SIGNATURE FOLLOWS]
22
IN WITNESS WHEREOF, the Company has executed this Warrant by its duly
authorized officer as of the day and year first above written.
IVIVI TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: CFO
23
SUBSCRIPTION FORM
(To Be Executed By The Warrantholder
In Order to Exercise The Warrant for Payment in Cash or by Check)
The undersigned, pursuant to [Section 2.1][Section 2.2] of the enclosed
Warrant, hereby irrevocably elects to exercise the right to purchase ________
shares of [INSERT APPLICABLE STOCK] of Ivivi Technologies, Inc. covered by such
Warrant, and herewith tenders $________ in full payment of the Applicable
Exercise Price for such shares.
The undersigned represents that (i) the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof, (ii) the
undersigned has no present intention of distributing or reselling such shares
and (iii) the undersigned is an "accredited investor" as such term is defined in
Rule 501(a) of Regulation D promulgated under the Securities Act.
Please issue a certificate representing said shares in the name of the
undersigned and deliver such certificate to the undersigned at the undersigned's
address set forth below. Please also issue a new Warrant in equivalent form and
tenor for the unexercised portion of the attached Warrant in the name of the
undersigned and deliver such new Warrant to the undersigned a the undersigned's
address set forth below.
By: __________________________________
Signature
_________________________________
Name
________________________________
Address
Dated: ________________________
SUBSCRIPTION FORM
(To Be Executed By The Warrantholder
In Order to Elect a Cashless Net Exercise of The Warrant)
The undersigned, pursuant to [Section 2.1][Section 2.2] of the enclosed
Warrant, hereby irrevocably elects to exercise the right to purchase ________
shares of [INSERT APPLICABLE STOCK] of Ivivi Technologies, Inc. covered by such
Warrant (the "Warrant Shares"), and herewith elects to receive that number of
Warrant Shares which is equal to the number of shares for which such Warrant is
being exercised, less the number of shares with an aggregate Fair Market Value
equal to the Applicable Exercise Price.
The undersigned represents that (i) the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof, (ii) the
undersigned has no present intention of distributing or reselling such shares
and (iii) the undersigned is an "accredited investor" as such term is defined in
Rule 501(a) of Regulation D promulgated under the Securities Act.
Please issue a certificate representing said shares in the name of the
undersigned and deliver such certificate to the undersigned at the undersigned's
address set forth below. Please also issue a new Warrant in equivalent form and
tenor for the unexercised portion of the attached Warrant in the name of the
undersigned and deliver such new Warrant to the undersigned a the undersigned's
address set forth below.
By: __________________________________
Signature
_________________________________
Name
________________________________
Address
Dated: ________________________
