Contract
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF 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. THESE
SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY
BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH
SECURITIES.
WARRANT
Original
Issue Date: June 6, 2006
PATIENT
SAFETY TECHNOLOGIES, INC.,
a
Delaware corporation (the “Company”),
hereby
certifies that, for value received, Xxxx X. Xxxxxxx, or his registered assigns
(the “Holder”),
is
entitled to purchase from the Company up to a total of 401,460 shares of Common
Stock (each such share, a “Warrant
Share”
and all
such shares, the “Warrant
Shares”),
at any
time and from time to time from and after the Original Issue Date and through
and including June 6, 2011 (the “Expiration
Date”),
and
subject to the following terms and conditions:
1. Definitions.
As used
in this Warrant, the following terms shall have the respective definitions
set
forth in this Section 1. Capitalized terms that are used and not defined in
this
Warrant that are defined in the Purchase Agreement (as defined below) shall
have
the respective definitions set forth in the Purchase Agreement.
“Affiliate”
means
any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as such terms
are
used in and construed under Rule 12b-2 promulgated under the Exchange Act.
“Business
Day”
means
any day except Saturday, Sunday and any day that is a federal legal holiday
in
the United States or a day on which banking institutions in the State of New
York are authorized or required by law or other government action to
close.
“Common
Stock”
means
the common stock of the Company, par value $0.33 per share, and any securities
into which such common stock may hereafter be reclassified.
“Common
Stock Equivalents” means
any
securities of the Company which would entitle the holder thereof to acquire
at
any time Common Stock, including without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time convertible
into or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.
“Exchange
Act” means
the
Securities Exchange Act of 1934, as amended.
“Exercise
Price” means
$3.04, subject to adjustment in accordance with Section 9.
“Fundamental
Transaction”
means
any of the following: (1) the Company effects any merger or consolidation of
the
Company with or into another Person, (2) the Company effects any sale of all
or
substantially all of its assets in one or a series of related transactions,
(3)
any tender offer or exchange offer (whether by the Company or another Person)
is
completed pursuant to which holders of Common Stock are permitted to tender
or
exchange their shares for other securities, cash or property, or (4) the Company
effects any reclassification 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.
“Los
Angeles Courts”
means
the state and federal courts sitting in the County of Los Angeles,
California.
“Original
Issue Date”
means
the Original Issue Date first set forth on the first page of this
Warrant.
“Person”
means
an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Purchase
Agreement”
means
the Secured Note and Warrant Purchase Agreement, dated June 6, 2006, to which
the Company and the original Holder are parties.
“Trading
Day”
means
(i) a day on which the Common Stock is traded on a Trading Market (other than
the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading
Market (other than the OTC Bulletin Board), a day on which the Common Stock
is
traded in the over-the-counter market, as reported by the OTC Bulletin Board,
or
(iii) if the Common Stock is not quoted on any Trading Market, a day on which
the Common Stock is quoted in the over-the-counter market as reported by the
Pink Sheets, LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the OTC Bulletin Board, the American Stock
Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq
Capital Market.
2. Registration
of Warrant and Transfers.
(a) 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.
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(b) The
Company shall register the transfer of any portion of this Warrant in its
warrant register, upon surrender of this Warrant, with the Form of Assignment
attached hereto duly completed and signed, to the Company at its address
specified herein. Upon any such registration or transfer, a new Warrant to
purchase Common Stock, in substantially the form of this Warrant (any such
new
Warrant, a “New
Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant.
3. Exercise
and Duration of Warrants.
This
Warrant shall be exercisable by the registered Holder at any time and from
time
to time on or after the Original Issue Date through and including the Expiration
Date. At 5:00 p.m., Los Angeles time on the Expiration Date, the portion of
this
Warrant not exercised prior thereto shall be and become void and of no value.
The Company may not call or redeem any portion of this Warrant without the
prior
written consent of the affected Holder.
4. Delivery
of Warrant Shares.
(a) To
effect
exercises hereunder, the Holder shall not be required to physically surrender
this Warrant unless the aggregate Warrant Shares represented by this Warrant
is
being exercised. Upon delivery of the Exercise Notice (in the form attached
hereto) to the Company (with the attached Warrant Shares Exercise Log) at its
address for notice set forth herein and upon payment of the Exercise Price
multiplied by the number of Warrant Shares that the Holder intends to purchase
hereunder, the Company shall promptly (but in no event later than three Trading
Days after the Date of Exercise (as defined herein)) issue and deliver to the
Holder, a certificate for the Warrant Shares issuable upon such exercise, which,
unless otherwise required by the Purchase Agreement, shall be free of
restrictive legends. The Company shall, upon request of the Holder and
subsequent to the date on which a registration statement covering the resale
of
the Warrant Shares has been declared effective by the Securities and Exchange
Commission, use its reasonable best efforts to deliver Warrant Shares hereunder
electronically through the Depository Trust Corporation or another established
clearing corporation performing similar functions, if available, provided,
that,
the Company may, but will not be required to change its transfer agent if its
current transfer agent cannot deliver Warrant Shares electronically through
the
Depository Trust Corporation. A “Date
of Exercise”
means
the date on which the Holder shall have delivered to the Company: (i) the
Exercise Notice (with the Warrant Exercise Log attached to it), appropriately
completed and duly signed and (ii) if such Holder is not utilizing the cashless
exercise provisions set forth in this Warrant, payment of the Exercise Price
for
the number of Warrant Shares so indicated by the Holder to be
purchased.
(b) If
by the
third Trading Day after a Date of Exercise the Company fails to deliver the
required number of Warrant Shares in the manner required pursuant to Section
4(a), then the Holder will have the right to rescind such exercise.
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(c) If
by the
third Trading Day after a Date of Exercise the Company fails to deliver the
required number of Warrant Shares in the manner required pursuant to Section
4(a), and if after such third Trading Day and prior to the receipt of such
Warrant Shares, the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”),
then
the Company shall (1) pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required
to
deliver to the Holder in connection with the exercise at issue by (B) the
closing bid price of the Common Stock on the Date of Exercise and (2) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored or deliver
to
the Holder the number of shares of Common Stock that would have been issued
had
the Company timely complied with its exercise and delivery obligations
hereunder. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.
(d) The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or
any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation
of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to
the
Holder in connection with the issuance of Warrant Shares. Nothing herein shall
limit a Xxxxxx’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 Warrant Shares upon exercise of the
Warrant as required pursuant to the terms hereof.
5. Trading
Market Limitations.
Unless
permitted by the applicable rules and regulations of the principal securities
market on which the Common Stock is then listed or traded, in no event shall
the
Company issue upon exercise of or otherwise pursuant to this Warrant and upon
conversion of or otherwise pursuant to the Note issued pursuant to the Purchase
Agreement more than the maximum number of shares of Common Stock that the
Company can issue pursuant to any rule of the principal securities market on
which the Common Stock is then traded (the “Maximum
Share Amount”),
which
the parties agree is, as of the Closing, 19.99% of the total shares of Common
Stock outstanding. In the event that the sum of (x) the aggregate number of
shares of Common Stock issued upon exercise of the Warrant and upon conversion
of the Note issued pursuant to the Purchase Agreement plus
(y) the
aggregate number of shares of Common Stock that remain issuable upon exercise
of
the Warrant and upon conversion of the Note issued pursuant to the Purchase
Agreement, represents at least one hundred percent (100%) of the Maximum Share
Amount (the “Triggering
Event”),
the
Company will use its best efforts to seek and obtain Shareholder Approval (or
obtain such other relief as will allow exercises hereunder in excess of the
Maximum Share Amount) as soon as practicable following the Triggering Event.
As
used herein, “Shareholder
Approval”
means
approval by the shareholders of the Company to authorize the issuance of the
full number of shares of Common Stock which would be issuable upon full exercise
of this Warrant and upon full conversion of the Note but for the Maximum Share
Amount.
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6. Charges,
Taxes and Expenses.
Issuance and delivery of Warrant Shares upon exercise of this Warrant shall
be
made without charge to the Holder for any issue or transfer tax, withholding
tax, transfer agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid
by
the Company; provided, however, that the Company shall not be required to pay
any tax which may be payable in respect of any transfer involved in the
registration of any certificates for Warrant Shares or Warrants in a name other
than that of the Holder. The Holder shall be responsible for all other tax
liability that may arise as a result of holding or transferring this Warrant
or
receiving Warrant Shares upon exercise hereof.
7. Replacement
of Warrant.
If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity (which shall not
include a surety bond), if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe. If a New Warrant is requested as a result of a mutilation of this
Warrant, then the Holder shall deliver such mutilated Warrant to the Company
as
a condition precedent to the Company’s obligation to issue the New
Warrant.
8. Reservation
of Warrant Shares.
The
Company covenants that it will at all times reserve and keep available out
of
the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which
are then issuable and deliverable upon the exercise of this entire Warrant,
free
from preemptive rights or any other contingent purchase rights of Persons other
than the Holder (taking into account the adjustments and restrictions of Section
9). The Company covenants that all Warrant Shares so issuable and deliverable
shall, upon issuance and the payment of the applicable Exercise Price in
accordance with the terms hereof, be duly and validly authorized, issued and
fully paid and nonassessable.
9. Certain
Adjustments.
The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this Section
9.
(a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class
of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction
of
which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution, and any adjustment pursuant to clause
(ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination.
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(b) Fundamental
Transactions.
If, at
any time while this Warrant is outstanding there is a Fundamental Transaction,
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant (the “Alternate
Consideration”).
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. At the Holder’s option and request, any successor to the Company or
surviving entity in such Fundamental Transaction shall either (1) issue to
the
Holder a new warrant substantially in the form of this Warrant and consistent
with the foregoing provisions and evidencing the Holder’s right to purchase the
Alternate Consideration for the aggregate Exercise Price upon exercise thereof,
or (2) purchase the Warrant from the Holder for a purchase price, payable in
cash within five Trading Days after such request (or, if later, on the effective
date of the Fundamental Transaction), equal to the value of the remaining
unexercised portion of this Warrant on the date of such request as determined
under the Black-Scholes Option Pricing Model. The terms of any agreement
pursuant to which a Fundamental Transaction is effected shall include terms
requiring any such successor or surviving entity to comply with the provisions
of this paragraph (b) and insuring that the Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous
to a Fundamental Transaction.
(c) Subsequent
Equity Sales.
(i)
If
the Company, at any time while this Warrant is outstanding, shall offer, sell,
grant any option to purchase or offer, sell or grant any right to reprice its
securities, or otherwise dispose of or issue (or announce any offer, sale,
grant
or any option to purchase or other disposition) any Common Stock or Common
Stock
Equivalents entitling any Person to acquire shares of Common Stock, at an
effective price per share (such lower price, the “New
Issue Price”
and each
such issuance, a “Dilutive
Issuance”)
less
than the then Exercise Price, as adjusted hereunder (if the holder of the Common
Stock or Common Stock Equivalents so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be entitled to
receive shares of Common Stock at an effective price per share which is less
than the then Exercise Price, such issuance shall be deemed to have occurred
for
less than the then Exercise Price), then immediately after each such Dilutive
Issuance, the Exercise Price then in effect shall be reduced to an amount equal
to the New Issue Price. Such adjustment shall be made whenever such Common
Stock
or Common Stock Equivalents are issued.
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(ii)
If
the Company, at any time while this Warrant is outstanding, shall effect the
sale of at least 25% of its assets (based on the fair market value of the assets
sold compared to the total assets of the Company) in one or a series of related
transactions (a “Fundamental
Asset Sale”),
then
the Company shall provide that the buyer of such assets (the “Successor
Entity”)
will,
upon consummation of each such Fundamental Asset Sale, issue to the Holder
a
security of the Successor Entity, evidenced by a written instrument
substantially similar in form and substance to this Warrant, to purchase (i)
such amount of equity interests in the Successor Entity having a fair market
value (measured at the closing of such Fundamental Asset Sale) equal to the
fair
market value of the assets sold to the Successor Entity multiplied by a fraction
equal to the number of shares exercisable under this Warrant divided by the
outstanding shares of Common Stock and Common Stock Equivalents of the Company
(the “Holder
Percentage”),
and
(ii) for a total exercise price equal to the amount of consideration actually
received by the Company in the Fundamental Asset Sale multiplied by the Holder
Percentage.
(d) Number
of Warrant Shares.
Simultaneously with any adjustment to the Exercise Price pursuant to Sections
9(a), (b) or (c), the number of Warrant Shares that may be purchased upon
exercise of this Warrant shall be increased or decreased proportionately, so
that after such adjustment the aggregate Exercise Price payable hereunder for
the adjusted number of Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment.
(e) Distribution
of Assets.
If the
Company shall declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of shares of Common Stock or Common
Stock Equivalents, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities, property or
options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (each, a
“Distribution”)
at any
time after the issuance of this Warrant, then, in each such case:
(i)
The
Exercise Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of shares of Common Stock
entitled to receive the Distribution shall be reduced, effective as of the
close
of business on such record date, to a price determined by multiplying such
Exercise Price by a fraction of which (i) the numerator shall be the closing
bid
price of the shares of Common Stock on the trading day immediately preceding
such record date minus the value of the Distribution (as determined in good
faith by the Company’s Board of Directors) applicable to one share of Common
Stock, and (ii) the denominator shall be the closing bid price of the shares
of
Common Stock on the trading day immediately preceding such record date;
and
(ii)
the
number of Warrant Shares shall be increased to a number of shares equal to
the
number of shares of Common Stock obtainable immediately prior to the close
of
business on the record date fixed for the determination of holders of shares
of
Common Stock entitled to receive the Distribution multiplied by the reciprocal
of the fraction set forth in the immediately preceding paragraph (i);
provided,
however,
that in
the event that the Distribution is of shares of capital stock (“Other
Shares of Capital Stock”)
of a
company whose shares are traded on a national securities exchange or a national
automated quotation system, then the Holder may elect to receive a warrant
to
purchase Other Shares of Capital Stock in lieu of an increase in the number
of
Warrant Shares, the terms of which shall be identical to those of this Warrant,
except that such warrant shall be exercisable into the number of shares of
Other
Shares of Capital Stock that would have been payable to the Holder pursuant
to
the Distribution had the Holder exercised this Warrant immediately prior to
such
record date and with an aggregate exercise price equal to the product of the
amount by which the exercise price of this Warrant was decreased with respect
to
the Distribution pursuant to the terms of the immediately preceding paragraph
(a) and the number of Warrant Shares calculated in accordance with the first
part of this paragraph (ii).
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(f) Calculations.
All
calculations under this Section 9 shall be made to the nearest 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.
(g) Notice
of Adjustments.
Upon
the occurrence of each adjustment pursuant to this Section 9, the Company at
its
expense will promptly compute such adjustment in accordance with the terms
of
this Warrant and prepare a certificate setting forth such adjustment, including
a statement of the adjusted Exercise Price and adjusted number or type of
Warrant Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such certificate
to
the Holder and to the Company’s Transfer Agent.
(h) Notice
of Corporate Events.
If the
Company (i) declares a dividend or any other distribution of cash, securities
or
other property in respect of its Common Stock, including without limitation
any
granting of rights or warrants to subscribe for or purchase any capital stock
of
the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to
the
Holder a notice describing the material terms and conditions of such transaction
(but only to the extent such disclosure would not result in the dissemination
of
material, non-public information to the Holder) at least 10 calendar days prior
to the applicable record or effective date on which a Person would need to
hold
Common Stock in order to participate in or vote with respect to such
transaction, and the Company will take all steps reasonably necessary in order
to insure that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with respect to
such
transaction; provided, however, that the failure to deliver such notice or
any
defect therein shall not affect the validity of the corporate action required
to
be described in such notice.
10. Payment
of Exercise Price.
The
Holder may pay the Exercise Price in one of the following manners:
(a) Cash
Exercise.
The
Holder may deliver immediately available funds; or
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(b) Cashless
Exercise.
Following the one year anniversary of the Original Issue Date, if an Exercise
Notice is delivered at a time when a registration statement permitting the
Holder to resell the Warrant Shares is not then effective or the prospectus
forming a part thereof is not then available to the Holder for the resale of
the
Warrant Shares, then the Holder may notify the Company in an Exercise Notice
of
its election to utilize cashless exercise, in which event the Company shall
issue to the Holder the number of Warrant Shares determined as
follows:
X
= Y
[(A-B)/A]
where:
X
= the
number of Warrant Shares to be issued to the Holder.
Y
= the
number of Warrant Shares with respect to which this Warrant is being
exercised.
A
= the
closing price (or average of the closing bid and asked if there is no closing
price) for the Trading Day immediately prior to (but not including) the Exercise
Date.
B
= the
Exercise Price.
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced,
on
the date this Warrant was originally issued.
11. Limitations
on Exercise.
Notwithstanding anything to the contrary contained herein, the number of Warrant
Shares that may be acquired by the Holder upon any exercise of this Warrant
(or
otherwise in respect hereof) shall be limited to the extent necessary to insure
that, following such exercise (or other issuance), the total number of shares
of
Common Stock then beneficially owned by such Holder and its Affiliates and
any
other Persons whose beneficial ownership of Common Stock would be aggregated
with the Holder’s for purposes of Section 13(d) of the Exchange Act does not
exceed 9.999% of the total number of issued and outstanding shares of Common
Stock (including for such purpose the shares of Common Stock issuable upon
such
exercise). For such purposes, beneficial ownership shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. This provision shall not restrict the number of shares
of Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder
may
receive in the event of a Fundamental Transaction as contemplated in Section
9
of this Warrant. The provisions of this Section 11 may be waived by the Holder,
at the election of the Holder, upon not less than 61 days’ prior notice to the
Company, and the provisions of this Section 11 shall continue to apply until
such 61st
day (or
such later date, as determined by the Holder, as may be specified in such notice
of waiver).
12. No
Fractional Shares.
No
fractional shares of Warrant Shares will be issued in connection with any
exercise of this Warrant. In lieu of any fractional shares which would,
otherwise be issuable, the Company shall pay cash equal to the product of such
fraction multiplied by the closing price of one Warrant Share as reported by
the
applicable Trading Market on the date of exercise.
9
13. Notices.
Any and
all notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice
or
communication is delivered via facsimile at the facsimile number specified
in
this Section prior to 5:00 p.m. (Los Angeles time) on a Trading Day, (ii) the
next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number specified in this Section
on
a day that is not a Trading Day or later than 5:00 p.m. (Los Angeles time)
on
any Trading Day, (iii) the Trading Day following the date of mailing, if sent
by
nationally recognized overnight courier service, or (iv) upon actual receipt
by
the party to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Company, to Patient Safety Technologies,
Inc., Attn: President, or to facsimile no.: (000)
000-0000
(or such
other address as the Company shall indicate in writing in accordance with this
Section), or (ii) if to the Holder, to the address or facsimile number appearing
on the Warrant Register or such other address or facsimile number as the Holder
may provide to the Company in accordance with this Section.
14. Warrant
Agent.
The
Company shall serve as warrant agent under this Warrant. Upon 10 days’ notice to
the Holder, the Company may appoint a new warrant agent. Any corporation into
which the Company or any new warrant agent may be merged or any corporation
resulting from any consolidation to which the Company or any new warrant agent
shall be a party or any corporation to which the Company or any new warrant
agent transfers substantially all of its corporate trust or shareholders
services business shall be a successor warrant agent under this Warrant without
any further act. Any such successor warrant agent shall promptly cause notice
of
its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder’s last address as shown on the Warrant
Register.
15. Miscellaneous.
(a) This
Warrant shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than
the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns.
(b) All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York (except for matters governed
by
corporate law in the State of Delaware), without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of this Warrant and
the
transactions herein contemplated (“Proceedings”)
(whether brought against a party hereto or its respective Affiliates, employees
or agents) shall be commenced exclusively in the Los Angeles Courts. Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the Los
Angeles Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any Proceeding, any
claim
that it is not personally subject to the jurisdiction of any Los Angeles Court,
or that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence
of
delivery) to such party at the address in effect for notices to it under this
Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted
by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Warrant or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions
of
this Warrant, then the prevailing party in such Proceeding shall be reimbursed
by the other party for its attorney’s fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such
Proceeding.
10
(c) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(d) In
case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(e) Prior
to
exercise of this Warrant, the Holder hereof shall not, by reason of being a
Holder, be entitled to any rights of a stockholder with respect to the Warrant
Shares.
[Remainder
of Page Intentionally Left Blank,
Signature
Page Follows]
11
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its
authorized officer as of the date first indicated above.
|
By:
/s/
Xxxxx
Xxxxxxxxxxx
Name:
Xxxxx Xxxxxxxxxxx
Title:
President
|
12
EXERCISE
NOTICE
WARRANT
DATED June __, 2006
The
undersigned Holder hereby irrevocably elects to purchase _____________ shares
of
Common Stock pursuant to the above referenced Warrant. Capitalized terms used
herein and not otherwise defined have the respective meanings set forth in
the
Warrant.
(1) The
undersigned Holder hereby exercises its right to purchase _________________
Warrant Shares pursuant to the Warrant.
(2) The
Holder intends that payment of the Exercise Price shall be made as (check
one):
|
____
|
“Cash Exercise” under Section 10 |
|
____
|
“Cashless Exercise” under Section 10 |
(3) If
the
holder has elected a Cash Exercise, the holder shall pay the sum of
$____________ to the Company in accordance with the terms of the
Warrant.
(4) Pursuant
to this Exercise Notice, the Company shall deliver to the holder _______________
Warrant Shares in accordance with the terms of the Warrant.
(5) By
its
delivery of this Exercise Notice, the undersigned represents and warrants to
the
Company that in giving effect to the exercise evidenced hereby the Holder will
not beneficially own in excess of the number of shares of Common Stock
(determined in accordance with Section 13(d) of the Securities Exchange Act
of
1934) permitted to be owned under Section 11 of this Warrant to which this
notice relates.
|
Dated:
_______________,
_______
|
Name
of Xxxxxx:
|
|
|
(Print)
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
(Signature
must conform in all respects to name of holder as specified on the
face of
the Warrant)
|
13
Warrant
Shares Exercise Log
|
Date
|
Number
of Warrant Shares Available to be Exercised
|
Number
of Warrant Shares Exercised
|
Number
of Warrant Shares Remaining to be Exercised
|
|
|
14
WARRANT
ORIGINALLY ISSUED June ___, 2006
WARRANT
NO. [ ]
FORM
OF
ASSIGNMENT
[To
be
completed and signed only upon transfer of Warrant]
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the above-captioned
Warrant to purchase ____________ shares of Common Stock to which such Warrant
relates and appoints ________________ attorney to transfer said right on the
books of the Company with full power of substitution in the
premises.
Dated: _______________,
____
|
_______________________________________
(Signature
must conform in all respects to name of holder as specified on the
face of
the Warrant)
_______________________________________
Address
of Transferee
_______________________________________
_______________________________________
|
In
the
presence of:
__________________________
15
