EXHIBIT 10.23
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE SET FORTH
HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS OF
MAY 23, 2005, NEITHER THIS WARRANT NOR ANY OF SUCH SHARES
MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER
SAID ACT OR, AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND
SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE
TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED UNDER SUCH
ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION S
UNDER SUCH ACT.
Right to
Purchase
43,716 Shares
of Common
Stock, par
value $.001
per share
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, New Millennium Capital
Partners II, LLC or its registered assigns, is entitled to purchase
from CalbaTech, Inc. a Nevada corporation (the "Company"), at any
time or from time to time during the period specified in Paragraph 2
hereof, Forty Three Thousand Seven Hundred and Sixteen (43,716) fully
paid and nonassessable shares of the Company's Common Stock, par
value $.001 per share (the "Common Stock"), at an exercise price per
share equal to $.35 (the "Exercise Price"). The term "Warrant
Shares," as used herein, refers to the shares of Common Stock
purchasable hereunder. The Warrant Shares and the Exercise Price are
subject to adjustment as provided in Paragraph 4 hereof. The term
"Warrants" means this Warrant and the other warrants issued pursuant
to that certain Securities Purchase Agreement, dated May 23, 2005, by
and among the Company and the Buyers listed on the execution page
thereof (the "Securities Purchase Agreement").
This Warrant is subject to the following terms, provisions, and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for
Shares. Subject to the provisions hereof, this Warrant may be exercised by the
holder hereof, in whole or in part, by the surrender of this Warrant,
together with a completed exercise agreement in the form attached
hereto (the "Exercise Agreement"), to the Company during normal
business hours on any business day at the Company's principal
executive offices (or such other office or agency of the Company as
it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check
or by wire transfer for the account of the Company of the Exercise
Price for the Warrant Shares specified in the Exercise Agreement or
(ii) if the resale of the Warrant Shares by the holder is not then
registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), delivery
to the Company of a written notice of an election to effect a
"Cashless Exercise" (as defined in Section 11(c) below) for the
Warrant Shares specified in the Exercise Agreement. The Warrant
Shares so purchased shall be deemed to be issued to the holder hereof
or such holder's designee, as the record owner of such shares, as of
the close of business on the date on which this Warrant shall have
been surrendered, the completed Exercise Agreement shall have been
delivered, and payment shall have been made for such shares as set
forth above. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise
Agreement, shall be delivered to the holder hereof within a
reasonable time, not exceeding three (3) business days, after this
Warrant shall have been so exercised. The certificates so delivered
shall be in such denominations as may be requested by the holder
hereof and shall be registered in the name of such holder or such
other name as shall be designated by such holder. If this Warrant
shall have been exercised only in part, then, unless this Warrant has
expired, the Company shall, at its expense, at the time of delivery
of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant
shall not then have been exercised. In addition to all other
available remedies at law or in equity, if the Company fails to
deliver certificates for the Warrant Shares within three (3) business
days after this Warrant is exercised, then the Company shall pay to
the holder in cash a penalty (the "Penalty") equal to 2% of the
number of Warrant Shares that the holder is entitled to multiplied by
the Market Price (as hereinafter defined) for each day that the
Company fails to deliver certificates for the Warrant Shares. For
example, if the holder is entitled to 100,000 Warrant Shares and the
Market Price is $2.00, then the Company shall pay to the holder
$4,000 for each day that the Company fails to deliver certificates
for the Warrant Shares. The Penalty shall be paid to the holder by
the fifth day of the month following the month in which it has accrued.
Notwithstanding anything in this Warrant to the contrary,
in no event shall the holder of this Warrant be entitled to exercise
a number of Warrants (or portions thereof) in excess of the number of
Warrants (or portions thereof) upon exercise of which the sum of (i)
the number of shares of Common Stock beneficially owned by the holder
and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised
Warrants and the unexercised or unconverted portion of any other
securities of the Company (including the Notes (as defined in the
Securities Purchase Agreement)) subject to a limitation on conversion
or exercise analogous to the limitation contained herein) and (ii)
the number of shares of Common Stock issuable upon exercise of the
Warrants (or portions thereof) with respect to which the
determination described herein is being made, would result in
beneficial ownership by the holder and its affiliates of more than
4.9% of the outstanding shares of Common Stock. For purposes of the
immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13D-G thereunder,
except as otherwise provided in clause (i) of the preceding sentence.
Notwithstanding anything to the contrary contained herein, the
limitation on exercise of this Warrant set forth herein may not be
amended without (i) the written consent of the holder hereof and the
Company and (ii) the approval of a majority of shareholders of the
Company.
2. Period of Exercise.
This Warrant is exercisable at any time or from time to time on or after
the date on which this Warrant is issued and delivered pursuant to
the terms of the Securities Purchase Agreement and before 6:00 p.m.,
New York, New York time on the fifth (5th) anniversary of the date of
issuance (the "Exercise Period").
3. Certain Agreements of the Company.
The Company hereby covenants and agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will,
upon issuance in accordance with the terms of this Warrant, be
validly issued, fully paid, and nonassessable and free from all
taxes, liens, and charges with respect to the issue thereof.
(b) Reservation of Shares. During the Exercise Period,
the Company shall at all times have authorized, and reserved for the
purpose of issuance upon exercise of this Warrant, a sufficient
number of shares of Common Stock to provide for the exercise of this
Warrant.
(c) Listing. The Company shall promptly secure the
listing of the shares of Common Stock issuable upon exercise of the
Warrant upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance upon exercise of this
Warrant) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all shares of Common Stock
from time to time issuable upon the exercise of this Warrant; and the
Company shall so list on each national securities exchange or
automated quotation system, as the case may be, and shall maintain
such listing of, any other shares of capital stock of the Company
issuable upon the exercise of this Warrant if and so long as any
shares of the same class shall be listed on such national securities
exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by
amendment of its charter or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed by it hereunder, but will at all times in good faith assist
in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the
holder of this Warrant in order to protect the exercise privilege of
the holder of this Warrant against dilution or other impairment,
consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not
increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect,
and (ii) will 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 Common Stock upon the exercise
of this Warrant.
(e) Successors and Assigns. This Warrant will be binding
upon any entity succeeding to the Company by merger, consolidation,
or acquisition of all or substantially all the Company's assets.
4. Antidilution Provisions.
During the Exercise Period, the Exercise Price and the number of
Warrant Shares shall be subject to adjustment from time to time as
provided in this Paragraph 4.
In the event that any adjustment of the Exercise Price as
required herein results in a fraction of a cent, such Exercise Price
shall be rounded up to the nearest cent.
(a) Adjustment of Exercise Price and Number of Shares upon
Issuance of Common Stock. Except as otherwise provided in Paragraphs
4(c) and 4(e) hereof, if and whenever on or after the date of
issuance of this Warrant, the Company issues or sells, or in
accordance with Paragraph 4(b) hereof is deemed to have issued or
sold, any shares of Common Stock for no consideration or for a
consideration per share (before deduction of reasonable expenses or
commissions or underwriting discounts or allowances in connection
therewith) less than the Market Price on the date of issuance (a
"Dilutive Issuance"), then immediately upon the Dilutive Issuance,
the Exercise Price will be reduced to a price determined by
multiplying the Exercise Price in effect immediately prior to the
Dilutive Issuance by a fraction, (i) the numerator of which is an
amount equal to the sum of (x) the number of shares of Common Stock
actually outstanding immediately prior to the Dilutive Issuance, plus
(y) the quotient of the aggregate consideration, calculated as set
forth in Paragraph 4(b) hereof, received by the Company upon such
Dilutive Issuance divided by the Market Price in effect immediately
prior to the Dilutive Issuance, and (ii) the denominator of which is
the total number of shares of Common Stock Deemed Outstanding (as
defined below) immediately after the Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For
purposes of determining the adjusted Exercise Price under Paragraph
4(a) hereof, the following will be applicable:
(i) Issuance of Rights or Options. If the Company in
any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase
Common Stock or other securities convertible into or exchangeable for
Common Stock ("Convertible Securities") (such warrants, rights and
options to purchase Common Stock or Convertible Securities are
hereinafter referred to as "Options") and the price per share for
which Common Stock is issuable upon the exercise of such Options is
less than the Market Price on the date of issuance or grant of such
Options, then the maximum total number of shares of Common Stock
issuable upon the exercise of all such Options will, as of the date
of the issuance or grant of such Options, be deemed to be outstanding
and to have been issued and sold by the Company for such price per
share. For purposes of the preceding sentence, the "price per share
for which Common Stock is issuable upon the exercise of such Options"
is determined by dividing (i) the total amount, if any, received or
receivable by the Company as consideration for the issuance or
granting of all such Options, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
exercise of all such Options, plus, in the case of Convertible
Securities issuable upon the exercise of such Options, the minimum
aggregate amount of additional consideration payable upon the
conversion or exchange thereof at the time such Convertible
Securities first become convertible or exchangeable, by (ii) the
maximum total number of shares of Common Stock issuable upon the
exercise of all such Options (assuming full conversion of Convertible
Securities, if applicable). No further adjustment to the Exercise
Price will be made upon the actual issuance of such Common Stock upon
the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.
(ii) Issuance of Convertible Securities. If the
Company in any manner issues or sells any Convertible Securities,
whether or not immediately convertible (other than where the same are
issuable upon the exercise of Options) and the price per share for
which Common Stock is issuable upon such conversion or exchange is
less than the Market Price on the date of issuance, then the maximum
total number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities will, as of the date
of the issuance of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company for such
price per share. For the purposes of the preceding sentence, the
"price per share for which Common Stock is issuable upon such
conversion or exchange" is determined by dividing (i) the total
amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or
exchange thereof at the time such Convertible Securities first become
convertible or exchangeable, by (ii) the maximum total number of
shares of Common Stock issuable upon the conversion or exchange of
all such Convertible Securities. No further adjustment to the
Exercise Price will be made upon the actual issuance of such Common
Stock upon conversion or exchange of such Convertible Securities.
(iii) Change in Option Price or Conversion Rate.
If there is a change at any time in (i) the amount of additional
consideration payable to the Company upon the exercise of any
Options; (ii) the amount of additional consideration, if any, payable
to the Company upon the conversion or exchange of any Convertible
Securities; or (iii) the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock (other than under
or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be
readjusted to the Exercise Price which would have been in effect at
such time had such Options or Convertible Securities still
outstanding provided for such changed additional consideration or
changed conversion rate, as the case may be, at the time initially
granted, issued or sold.
(iv) Treatment of Expired Options and Unexercised
Convertible Securities. If, in any case, the total number of shares
of Common Stock issuable upon exercise of any Option or upon
conversion or exchange of any Convertible Securities is not, in fact,
issued and the rights to exercise such Option or to convert or
exchange such Convertible Securities shall have expired or
terminated, the Exercise Price then in effect will be readjusted to
the Exercise Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such
expiration or termination (other than in respect of the actual number
of shares of Common Stock issued upon exercise or conversion
thereof), never been issued.
(v) Calculation of Consideration Received. If any
Common Stock, Options or Convertible Securities are issued, granted
or sold for cash, the consideration received therefor for purposes of
this Warrant will be the amount received by the Company therefor,
before deduction of reasonable commissions, underwriting discounts or
allowances or other reasonable expenses paid or incurred by the
Company in connection with such issuance, grant or sale. In case any
Common Stock, Options or Convertible Securities are issued or sold
for a consideration part or all of which shall be other than cash,
the amount of the consideration other than cash received by the
Company will be the fair value of such consideration, except where
such consideration consists of securities, in which case the amount
of consideration received by the Company will be the Market Price
thereof as of the date of receipt. In case any Common Stock, Options
or Convertible Securities are issued in connection with any
acquisition, merger or consolidation in which the Company is the
surviving corporation, the amount of consideration therefor will be
deemed to be the fair value of such portion of the net assets and
business of the non-surviving corporation as is attributable to such
Common Stock, Options or Convertible Securities, as the case may be.
The fair value of any consideration other than cash or securities
will be determined in good faith by the Board of Directors of the
Company.
(vi) Exceptions to Adjustment of Exercise Price. No
adjustment to the Exercise Price will be made (i) upon the exercise
of any warrants, options or convertible securities granted, issued
and outstanding on the date of issuance of this Warrant; (ii) upon
the grant or exercise of any stock or options which may hereafter be
granted or exercised under any employee benefit plan, stock option
plan or restricted stock plan of the Company now existing or to be
implemented in the future, so long as the issuance of such stock or
options is approved by a majority of the independent members of the
Board of Directors of the Company or a majority of the members of a
committee of independent directors established for such purpose; or
(iii) upon the exercise of the Warrants.
(c) Subdivision or Combination of Common Stock. If the
Company at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the
shares of Common Stock acquirable hereunder into a greater number of
shares, then, after the date of record for effecting such
subdivision, the Exercise Price in effect immediately prior to such
subdivision will be proportionately reduced. If the Company at any
time combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common
Stock acquirable hereunder into a smaller number of shares, then,
after the date of record for effecting such combination, the Exercise
Price in effect immediately prior to such combination will be
proportionately increased.
(d) Adjustment in Number of Shares. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Paragraph 4,
the number of shares of Common Stock issuable upon exercise of this
Warrant shall be adjusted by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the
number of shares of Common Stock issuable upon exercise of this
Warrant immediately prior to such adjustment and dividing the product
so obtained by the adjusted Exercise Price.
(e) Consolidation, Merger or Sale. In case of any
consolidation of the Company with, or merger of the Company into any
other corporation, or in case of any sale or conveyance of all or
substantially all of the assets of the Company other than in
connection with a plan of complete liquidation of the Company, then
as a condition of such consolidation, merger or sale or conveyance,
adequate provision will be made whereby the holder of this Warrant
will have the right to acquire and receive upon exercise of this
Warrant in lieu of the shares of Common Stock immediately theretofore
acquirable upon the exercise of this Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or
in exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of this Warrant
had such consolidation, merger or sale or conveyance not taken place.
In any such case, the Company will make appropriate provision to
insure that the provisions of this Paragraph 4 hereof will thereafter
be applicable as nearly as may be in relation to any shares of stock
or securities thereafter deliverable upon the exercise of this
Warrant. The Company will not effect any consolidation, merger or
sale or conveyance unless prior to the consummation thereof, the
successor corporation (if other than the Company) assumes by written
instrument the obligations under this Paragraph 4 and the obligations
to deliver to the holder of this Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions,
the holder may be entitled to acquire.
(f) Distribution of Assets. In case the Company shall
declare or make any distribution of its assets (including cash) to
holders of Common Stock as a partial liquidating dividend, by way of
return of capital or otherwise, then, after the date of record for
determining shareholders entitled to such distribution, but prior to
the date of distribution, the holder of this Warrant shall be
entitled upon exercise of this Warrant for the purchase of any or all
of the shares of Common Stock subject hereto, to receive the amount
of such assets which would have been payable to the holder had such
holder been the holder of such shares of Common Stock on the record
date for the determination of shareholders entitled to such
distribution.
(g) Notice of Adjustment. Upon the occurrence of any
event which requires any adjustment of the Exercise Price, then, and
in each such case, the Company shall give notice thereof to the
holder of this Warrant, which notice shall state the Exercise Price
resulting from such adjustment and the increase or decrease in the
number of Warrant Shares purchasable at such price upon exercise,
setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall
be certified by the Chief Financial Officer of the Company.
(h) Minimum Adjustment of Exercise Price. No adjustment
of the Exercise Price shall be made in an amount of less than 1% of
the Exercise Price in effect at the time such adjustment is otherwise
required to be made, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments so carried
forward, shall amount to not less than 1% of such Exercise Price.
(i) No Fractional Shares. No fractional shares of Common
Stock are to be issued upon the exercise of this Warrant, but the
Company shall pay a cash adjustment in respect of any fractional
share which would otherwise be issuable in an amount equal to the
same fraction of the Market Price of a share of Common Stock on the
date of such exercise.
(j) Other Notices. In case at any time:
(i) the Company shall declare any dividend upon the
Common Stock payable in shares of stock of any class or make any
other distribution (including dividends or distributions payable in
cash out of retained earnings) to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata
to the holders of the Common Stock any additional shares of stock of
any class or other rights;
(iii) there shall be any capital reorganization of
the Company, or reclassification of the Common Stock, or
consolidation or merger of the Company with or into, or sale of all
or substantially all its assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in each such case, the Company shall give to the holder of this
Warrant (a) notice of the date on which the books of the Company
shall close or a record shall be taken for determining the holders of
Common Stock entitled to receive any such dividend, distribution, or
subscription rights or for determining the holders of Common Stock
entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up, notice of the date (or, if
not then known, a reasonable approximation thereof by the Company)
when the same shall take place. Such notice shall also specify the
date on which the holders of Common Stock shall be entitled to
receive such dividend, distribution, or subscription rights or to
exchange their Common Stock for stock or other securities or property
deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding-up,
as the case may be. Such notice shall be given at least 30 days
prior to the record date or the date on which the Company's books are
closed in respect thereto. Failure to give any such notice or any
defect therein shall not affect the validity of the proceedings
referred to in clauses (i), (ii), (iii) and (iv) above.
(k) Certain Events. If any event occurs of the type
contemplated by the adjustment provisions of this Paragraph 4 but not
expressly provided for by such provisions, the Company will give
notice of such event as provided in Paragraph 4(g) hereof, and the
Company's Board of Directors will make an appropriate adjustment in
the Exercise Price and the number of shares of Common Stock
acquirable upon exercise of this Warrant so that the rights of the
holder shall be neither enhanced nor diminished by such event.
(l) Certain Definitions.
(i) "Common Stock Deemed Outstanding" shall mean the
number of shares of Common Stock actually outstanding (not including
shares of Common Stock held in the treasury of the Company), plus (x)
pursuant to Paragraph 4(b)(i) hereof, the maximum total number of
shares of Common Stock issuable upon the exercise of Options, as of
the date of such issuance or grant of such Options, if any, and (y)
pursuant to Paragraph 4(b)(ii) hereof, the maximum total number of
shares of Common Stock issuable upon conversion or exchange of
Convertible Securities, as of the date of issuance of such
Convertible Securities, if any.
(ii) "Market Price," as of any date, (i) means the
average of the last reported sale prices for the shares of Common
Stock on the OTCBB for the five (5) Trading Days immediately
preceding such date as reported by Bloomberg, or (ii) if the OTCBB is
not the principal trading market for the shares of Common Stock, the
average of the last reported sale prices on the principal trading
market for the Common Stock during the same period as reported by
Bloomberg, or (iii) if market value cannot be calculated as of such
date on any of the foregoing bases, the Market Price shall be the
fair market value as reasonably determined in good faith by (a) the
Board of Directors of the Company or, at the option of a majority-in-
interest of the holders of the outstanding Warrants by (b) an
independent investment bank of nationally recognized standing in the
valuation of businesses similar to the business of the corporation.
The manner of determining the Market Price of the Common Stock set
forth in the foregoing definition shall apply with respect to any
other security in respect of which a determination as to market value
must be made hereunder.
(iii) "Common Stock," for purposes of this
Paragraph 4, includes the Common Stock, par value $.001 per share,
and any additional class of stock of the Company having no preference
as to dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only shares
of Common Stock, par value $.001 per share, in respect of which this
Warrant is exercisable, or shares resulting from any subdivision or
combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of
the character referred to in Paragraph 4(e) hereof, the stock or
other securities or property provided for in such Paragraph.
5. Issue Tax.
The issuance of certificates for Warrant Shares upon the exercise of
this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect
thereof, provided that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than the
holder of this Warrant.
6. No Rights or Liabilities as a Shareholder.
This Warrant shall not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company. No provision of this
Warrant, in the absence of affirmative action by the holder hereof to
purchase Warrant Shares, and no mere enumeration herein of the rights
or privileges of the holder hereof, shall give rise to any liability
of such holder for the Exercise Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by
creditors of the Company.
7. Transfer, Exchange, and Replacement of Warrant.
(a) Restriction on Transfer. This Warrant and the rights
granted to the holder hereof are transferable, in whole or in part,
upon surrender of this Warrant, together with a properly executed
assignment in the form attached hereto, at the office or agency of
the Company referred to in Paragraph 7(e) below, provided, however,
that any transfer or assignment shall be subject to the conditions
set forth in Paragraph 7(f) hereof and to the applicable provisions
of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may
treat the registered holder hereof as the owner and holder hereof for
all purposes, and the Company shall not be affected by any notice to
the contrary. Notwithstanding anything to the contrary contained
herein, the registration rights described in Paragraph 8 are
assignable only in accordance with the provisions of that certain
Registration Rights Agreement, dated May 23, 2005, by and among the
Company and the other signatories thereto (the "Registration Rights
Agreement").
(b) Warrant Exchangeable for Different Denominations.
This Warrant is exchangeable, upon the surrender hereof by the holder
hereof at the office or agency of the Company referred to in
Paragraph 7(e) below, for new Warrants of like tenor representing in
the aggregate the right to purchase the number of shares of Common
Stock which may be purchased hereunder, each of such new Warrants to
represent the right to purchase such number of shares as shall be
designated by the holder hereof at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Warrant and, in the case of any
such loss, theft, or destruction, upon delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company,
or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the surrender
of this Warrant in connection with any transfer, exchange, or
replacement as provided in this Paragraph 7, this Warrant shall be
promptly canceled by the Company. The Company shall pay all taxes
(other than securities transfer taxes) and all other expenses (other
than legal expenses, if any, incurred by the holder or transferees)
and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Paragraph 7.
(e) Register. The Company shall maintain, at its
principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), a
register for this Warrant, in which the Company shall record the name
and address of the person in whose name this Warrant has been issued,
as well as the name and address of each transferee and each prior
owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the
time of the surrender of this Warrant in connection with any
exercise, transfer, or exchange of this Warrant, this Warrant (or, in
the case of any exercise, the Warrant Shares issuable hereunder),
shall not be registered under the Securities Act of 1933, as amended
(the "Securities Act") and under applicable state securities or blue
sky laws, the Company may require, as a condition of allowing such
exercise, transfer, or exchange, (i) that the holder or transferee of
this Warrant, as the case may be, furnish to the Company a written
opinion of counsel, which opinion and counsel are acceptable to the
Company, to the effect that such exercise, transfer, or exchange may
be made without registration under said Act and under applicable
state securities or blue sky laws, (ii) that the holder or transferee
execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be
an "accredited investor" as defined in Rule 501(a) promulgated under
the Securities Act; provided that no such opinion, letter or status
as an "accredited investor" shall be required in connection with a
transfer pursuant to Rule 144 under the Securities Act. The first
holder of this Warrant, by taking and holding the same, represents to
the Company that such holder is acquiring this Warrant for investment
and not with a view to the distribution thereof.
8. Registration Rights.
The initial holder of this Warrant (and certain assignees thereof) is
entitled to the benefit of such registration rights in respect of the
Warrant Shares as are set forth in Section 2 of the Registration
Rights Agreement.
9. Notices.
All notices, requests, and other communications required or permitted to
be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered, or shall be sent by
certified or registered mail or by recognized overnight mail courier,
postage prepaid and addressed, to such holder at the address shown
for such holder on the books of the Company, or at such other address
as shall have been furnished to the Company by notice from such
holder. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the Company shall be
in writing, and shall be personally delivered, or shall be sent by
certified or registered mail or by recognized overnight mail courier,
postage prepaid and addressed, to the office of the Company at 00000
Xxxxxxxx Xxxxxxx, Xxxxx X-000, Xxxxxx, XX 00000, Attention:
President and Chief Executive Officer, or at such other address as
shall have been furnished to the holder of this Warrant by notice
from the Company. Any such notice, request, or other communication
may be sent by facsimile, but shall in such case be subsequently
confirmed by a writing personally delivered or sent by certified or
registered mail or by recognized overnight mail courier as provided
above. All notices, requests, and other communications shall be
deemed to have been given either at the time of the receipt thereof
by the person entitled to receive such notice at the address of such
person for purposes of this Paragraph 9, or, if mailed by registered
or certified mail or with a recognized overnight mail courier upon
deposit with the United States Post Office or such overnight mail
courier, if postage is prepaid and the mailing is properly addressed,
as the case may be.
10. Governing Law.
THIS WARRANT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO
THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS
LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING
UNDER THIS WARRANT, THE AGREEMENTS ENTERED INTO IN CONNECTION
HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH
PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL
BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE
PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT
EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN
ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED
IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE
ARISING UNDER THIS WARRANT SHALL BE RESPONSIBLE FOR ALL FEES AND
EXPENSES, INCLUDING ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY
IN CONNECTION WITH SUCH DISPUTE.
11. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may
only be amended by an instrument in writing signed by the Company and
the holder hereof.
(b) Descriptive Headings. The descriptive headings of the
several paragraphs of this Warrant are inserted for purposes of
reference only, and shall not affect the meaning or construction of
any of the provisions hereof.
(c) Cashless Exercise. Notwithstanding anything to the
contrary contained in this Warrant, if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act, this Warrant may be
exercised by presentation and surrender of this Warrant to the
Company at its principal executive offices with a written notice of
the holder's intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued upon
such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, in lieu of paying
the Exercise Price in cash, the holder shall surrender this Warrant
for that number of shares of Common Stock determined by multiplying
the number of Warrant Shares to which it would otherwise be entitled
by a fraction, the numerator of which shall be the difference between
the then current Market Price per share of the Common Stock and the
Exercise Price, and the denominator of which shall be the then
current Market Price per share of Common Stock. For example, if the
holder is exercising 100,000 Warrants with a per Warrant exercise
price of $0.75 per share through a cashless exercise when the Common
Stock's current Market Price per share is $2.00 per share, then upon
such Cashless Exercise the holder will receive 62,500 shares of
Common Stock.
(d) Remedies. The Company acknowledges that a breach by
it of its obligations hereunder will cause irreparable harm to the
holder, by vitiating the intent and purpose of the transaction
contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Warrant will
be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Warrant, that the
holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable
herein, to an injunction or injunctions restraining, preventing or
curing any breach of this Warrant and to enforce specifically the
terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company has caused this Warrant to
be signed by its duly authorized officer.
CALBATECH, INC.
By: _______________________________
Xxxxx XxXxxxx
Chief Executive Officer
Dated as of May 23, 2005
FORM OF EXERCISE AGREEMENT
Dated: ________ __, 200_
To:______________________
The undersigned, pursuant to the provisions set forth in the
within Warrant, hereby agrees to purchase ________ shares of Common
Stock covered by such Warrant, and makes payment herewith in full
therefor at the price per share provided by such Warrant in cash or
by certified or official bank check in the amount of, or, if the
resale of such Common Stock by the undersigned is not currently
registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended, by surrender of securities issued
by the Company (including a portion of the Warrant) having a market
value (in the case of a portion of this Warrant, determined in
accordance with Section 11(c) of the Warrant) equal to $_________.
Please issue a certificate or certificates for such shares of Common
Stock in the name of and pay any cash for any fractional share to:
Name:
_____________________________
Signature:
Address:__________________________
_____________________________
Note: The above signature should correspond
exactly with the name on the face of the within
Warrant, if applicable.
and, if said number of shares of Common Stock shall not be all the
shares purchasable under the within Warrant, a new Warrant is to be
issued in the name of said undersigned covering the balance of the
shares purchasable thereunder less any fraction of a share paid in cash.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant,
with respect to the number of shares of Common Stock covered thereby
set forth hereinbelow, to:
Name of Assignee Address No of Shares
, and hereby irrevocably constitutes and appoints
___________________________________ as agent and attorney-in-fact to
transfer said Warrant on the books of the within-named corporation,
with full power of substitution in the premises.
Dated: ________ __, 200_
In the presence of:
______________________________
Name:______________________________
Signature:_________________________
Title of Signing Officer or Agent (if any):
______________________________
Address:
______________________________
______________________________
Note: The above signature should correspond exactly
with the name on the face of the within Warrant, if
applicable.
