COMMON STOCK PURCHASE WARRANT To Purchase _________ Shares of Common Stock of CHEMBIO DIAGNOSTICS, INC.
Exhibit
4.16
EXHIBIT
C
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR
OTHER LOAN SECURED BY SUCH SECURITIES.
COMMON
STOCK PURCHASE WARRANT
To
Purchase _________ Shares of Common Stock of
|
Original
Date of Issuance: ____________
|
Reissuance
Date: December 19, 2007
|
|
Warrant
No.: ________________
|
Expires: _________________
|
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, ___________(the “Holder”), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set
forth,
at any time on or after the original date of issuance (the “Initial Exercise
Date”) and on or prior to the close of business on the fifth anniversary of
the Initial Exercise Date (the “Termination Date”) but not thereafter, to
subscribe for and purchase from Chembio Diagnostics, Inc., a Nevada corporation
(the “Company”), up to __________ (__________) shares (the “Warrant
Shares”) of Common Stock, par value $0.01 per share, of the Company (the
“Common Stock”). The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price, as defined
in
Section 2(b).
Section
1. Definitions. Capitalized
terms used and not otherwise defined herein shall have the meanings set forth
in
that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated October 5, 2006, among the Company and the purchasers
signatory thereto.
Section
2. Exercise.
(a) Exercise
of the purchase rights represented by this Warrant may be made, in whole
or in
part, at any time or times on or after the Initial Exercise Date and on or
before the Termination Date by delivery to the Company of a duly executed
facsimile copy of the Notice of Exercise Form annexed hereto (or such other
office or agency of the Company as it may designate by notice in writing
to the
registered Holder at the address of such Holder appearing on the books of
the
Company); and, within 3 Trading Days of the date said Notice of Exercise
is
delivered to the Company, the Company shall have received payment of the
aggregate Exercise Price of the shares thereby purchased by wire transfer
or
cashier’s check drawn on a United States bank. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased all
of the
Warrant Shares available hereunder and the Warrant has been exercised in
full,
in which case, the Holder shall surrender this Warrant to the Company for
cancellation within 3 Trading Days of the date the final Notice of Exercise
is
delivered to the Company. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available
hereunder shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable number
of
Warrant Shares purchased. The Holder and the Company shall maintain
records showing the number of Warrant Shares purchased and the date of such
purchases. The Company shall deliver any objection to any Notice of
Exercise Form within 1 Business Day of receipt of such notice. In the
event of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error. The
Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
that, by reason of the provisions of this paragraph, following the purchase
of a
portion of the Warrant Shares hereunder, the number of Warrant Shares available
for purchase hereunder at any given time may be less than the amount stated
on
the face hereof.
(b) The
exercise price of the Common Stock under this Warrant shall be as follows,
subject to adjustment hereunder (the “Exercise Price”):
(i) For
the period 4:01p.m. eastern time (“ET”) through 9:59p.m. ET on the Plan
Closing Date, $0.40 per share for all or any portion of this Warrant exercised
for cash;
(ii) For
the period 4:01p.m. ET through 9:59p.m. ET on the Plan Closing Date, $0.45
per
share for all or any portion of this Warrant exercised through a Cashless
Exercise;
(iii) For
the period beginning 10:00p.m. ET on the Plan Closing Date through 9:59p.m.
ET
on the Final Plan Date, $0.45 for all or any part of this Warrant exercised
by a
Holder who exercised at least 10% of all of such Holder’s warrants and options
for cash at the Plan Closing Date;
(iv) For
the period beginning 10:00p.m. ET on the Plan Closing Date, $1.00 per share
for
any Holder that did not exercise at least 10% of all of such Holder’s warrants
and options for cash at an exercise price of $0.40 per share at the Plan
Closing
Date; and
(v) For
the period beginning 10:00p.m. ET on the Final Plan Date, $1.00 per share
for
all or any portion of this Warrant that has not been exercised on or before
9:59p.m. ET on the Final Plan Date.
(c) Cashless
Exercise.
(i) At
the option of the Holder, this Warrant may be exercised by means of a “cashless
exercise” (a “Cashless Exercise”) in which the Holder shall be entitled
to receive a certificate for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
(A)
= the
VWAP for the ten-Trading Day period that ends on the first Trading Day
immediately preceding the date of such election;
(B)
= the
applicable Exercise Price of this Warrant in effect on the date of exercise,
as
adjusted; and
(X)
= the
number of Warrant Shares issuable upon exercise of this Warrant in accordance
with the terms of this Warrant by means of a cash exercise rather than a
cashless exercise.
(ii) Notwithstanding
anything herein to the contrary, for any Notice of Exercise Form dated on
the
Plan Closing Date received from a Holder who exercises its warrants on cashless
basis at $0.45 per share before 10:00p.m. ET on the Plan Closing Date, the
value
of (A) in the equation set forth in Section 2(c)(i) above shall be equal
to the
greater of $0.53 or the VWAP for the ten-Trading Day period that ends on
the
second Trading Day prior to the date of the Notice of Exercise
Form.
(iii) Notwithstanding
anything herein to the contrary, for any Notice of Exercise Form dated between
and inclusive of the Plan Closing Date and the Final Plan Date received from
a
Holder who exercises at least 10% of all of such Holder's warrants and options
for cash before 10:00p.m. ET on the Plan Closing Date the value of (A) in
the
equation set forth in Section 2(c)(i) above shall be equal to the greater
of
$0.53 or the VWAP for the ten-Trading Day period that ends on the second
Trading
Day prior to the date of the Notice of Exercise Form. Any Exercise
Form dated on the Final Plan Date must be received by the Company within
five
Trading Days of the Final Plan Date to be effective.
(iv) Notwithstanding
anything herein to the contrary, a Holder who does not exercise (i) at least
10%
of all of such Holder's warrants and options issued by the Company for cash
at
an exercise price of $0.40 per share before 10:00p.m. ET on the Plan Closing
Date, or (ii) its warrants on cashless basis at $0.45 per share by 10:00p.m.
ET
on the Plan Closing Date, shall not be permitted to exercise its Warrants
on a
cashless basis pursuant to Section 2(c)(i) above until April 1,
2008.
(d) The
Company shall not effect any exercise of this Warrant, and a Holder shall
not
have the right to exercise any portion of this Warrant, pursuant to Section
2(c)
or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, such Holder
(together with such Holder’s Affiliates, and any other person or entity acting
as a group together with such Holder or any of such Holder’s Affiliates), as set
forth on the applicable Notice of Exercise, would beneficially own in excess
of
the Beneficial Ownership Limitation (as defined below). For purposes
of the foregoing sentence, the number of shares of Common Stock beneficially
owned by such Holder and its Affiliates shall include the number of shares
of
Common Stock issuable upon exercise of this Warrant with respect to which
such
determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (A) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by such Holder or any of its
Affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation,
any other Preferred Stock or Warrants) subject to a limitation on conversion
or
exercise analogous to the limitation contained herein beneficially owned
by such
Holder or any of its affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 2(d)(i), beneficial ownership shall
be
calculated in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder, it being acknowledged by a Holder
that
the Company is not representing to such Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and such Holder is solely
responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation contained in this
Section 2(d) applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by such Holder together with any
Affiliates) and of which a portion of this Warrant is exercisable shall be
in
the sole discretion of a Holder, and the submission of a Notice of Exercise
shall be deemed to be each Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by such Holder together
with
any Affiliates) and of which portion of this Warrant is exercisable, in each
case subject to such aggregate percentage limitation, and the Company shall
have
no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of
the
Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2(d), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number
of
outstanding shares of Common Stock as reflected in (x) the Company’s most recent
Form 10-QSB or Form 10-KSB, as the case may be, (y) a more recent public
announcement by the Company or (z) any other notice by the Company or the
Company’s Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder, the
Company shall within two Trading Days confirm orally and in writing to such
Holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined
after
giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by such Holder or its Affiliates since the date as
of
which such number of outstanding shares of Common Stock was
reported. The “Beneficial Ownership Limitation” shall be 4.99%
of the number of shares of the Common Stock outstanding immediately after
giving
effect to the issuance of shares of Common Stock issuable upon exercise of
this
Warrant. The Beneficial Ownership Limitation provisions of this
Section 2(d)(i) may be waived by such ▇▇▇▇▇▇, at the election of such Holder,
upon not less than 61 days’ prior notice to the Company to change the Beneficial
Ownership Limitation to 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of
Common
Stock upon exercise of this Warrant, and the provisions of this Section 2(d)
shall continue to apply. Upon such a change by a Holder of the
Beneficial Ownership Limitation from such 4.99% limitation to such 9.99%
limitation, the Beneficial Ownership Limitation may not be further waived
by
such Holder. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms
of
this Section 2(d)(i) to correct this paragraph (or any portion hereof) which
may
be defective or inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or desirable
to
properly give effect to such limitation. The limitations contained in
this paragraph shall apply to a successor holder of this
Warrant. Notwithstanding anything set forth in this Section 2(d), the
4.99% and 9.99% beneficial ownership limitations imposed by this Section
2(d)
shall not apply to Common Stock issuable upon the exercise of Warrants in
connection with the Plan.
(e) Mechanics
of Exercise.
(i) Authorization
of Warrant Shares. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented
by this
Warrant will, upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and nonassessable and free
from
all taxes, liens and charges in respect of the issue thereof (other than
taxes
in respect of any transfer occurring contemporaneously with such
issue).
(ii) Delivery
of Certificates Upon Exercise. Certificates for shares purchased
hereunder shall be transmitted by the transfer agent of the Company to the
Holder by crediting the account of the Holder’s prime broker with the Depository
Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”)
system if the Company is a participant in such system, and otherwise by physical
delivery to the address specified by the Holder in the Notice of Exercise
within
3 Trading Days from the delivery to the Company of the Notice of Exercise
Form,
surrender of this Warrant and payment of the aggregate Exercise Price as
set
forth above (“Warrant Share Delivery Date”). This Warrant
shall be deemed to have been exercised on the date the Exercise Price is
received by the Company. The Warrant Shares shall be deemed to have
been issued, and Holder or any other person so designated to be named therein
shall be deemed to have become a holder of record of such shares for all
purposes, as of the date the Warrant has been exercised by payment to the
Company of the Exercise Price (or by cashless exercise, if permitted) and
all
taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vii)
prior to the issuance of such shares, have been paid.
(iii) Delivery
of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Shares, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other respects
be
identical with this Warrant.
(iv) Rescission
Rights. If the Company fails to cause its transfer agent to
transmit to the Holder a certificate or certificates representing the Warrant
Shares pursuant to this Section 2(e)(iv) by the Warrant Share Delivery Date,
then the Holder will have the right to rescind such exercise.
(v) Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon
Exercise. In addition to any other rights available to the
Holder, if the Company fails to cause its transfer agent to transmit to the
Holder a certificate or certificates representing the Warrant Shares pursuant
to
an exercise on or before the Warrant Share Delivery Date, and if after such
date
the Holder is required by its broker to purchase (in an open market transaction
or otherwise) or the Holder’s brokerage firm otherwise purchases 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
times (B) the price at which the sell order giving rise to such purchase
obligation was executed, 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. For example, if the
Holder purchases Common Stock having a total purchase price of $11,000 to
cover
a Buy-In with respect to an attempted exercise of shares of Common Stock
with an
aggregate sale price giving rise to such purchase obligation of $10,000,
under
clause (1) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of
the
Buy-In, together with applicable confirmations and other evidence reasonably
requested by the Company. Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant
as
required pursuant to the terms hereof.
(vi) No
Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise
be entitled to purchase upon such exercise, the Company shall pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price.
(vii) Charges,
Taxes and Expenses. Issuance of certificates for Warrant Shares
shall be made without charge to the Holder for any issue or transfer tax
or
other incidental expense in respect of the issuance of such certificate,
all of
which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may
be
directed by the Holder; provided, however, that in the event
certificates for Warrant Shares are to be issued in a name other than the
name
of the Holder, this Warrant when surrendered for exercise shall be accompanied
by the Assignment Form attached hereto duly executed by the Holder; and the
Company may require, as a condition thereto, the payment of a sum sufficient
to
reimburse it for any transfer tax incidental thereto.
(viii) Closing
of Books. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
(f) For
purposes of this warrant, the term “Plan” shall mean any action the
Company takes, with any required approval of the holders thereof, on or before
the Final Plan Date as contemplated by the Plan Summary and accompanying
materials provided to holders on December 4, 2007, in connection with the
reduction or other modification of terms of the Company’s then-outstanding
preferred stock, warrants and options, including, but not limited to, actions
the Company takes to (i) facilitate the conversion of the Series A, B and
C
Convertible Preferred Stock; (ii) reduce the exercise price of any of the
Company’s outstanding warrants or options; (iii) offer the holders of the
Company’s warrants and options the opportunity to exercise such warrants and
options on a cash and/or cashless basis; and (iv) make other amendments to
the
documents governing these securities to effect these modifications, and to
facilitate the conversion and exercise of these securities.
(g) “Plan
Closing Date” shall be December 19, 2007.
(h) “Final
Plan Date” shall mean the date that is six months and twelve days after the
Plan Closing Date.
Section
3. Certain
Adjustments.
(a) Stock
Dividends and Splits. If the Company, at any time while this
Warrant is outstanding: (A) pays a stock dividend or otherwise make a
distribution or distributions on shares of its Common Stock or any other
equity
or equity equivalent securities payable in shares of Common Stock (which,
for
avoidance of doubt, shall not include any shares of Common Stock issued by
the
Company upon exercise of this Warrant, the Company’s Series A Convertible
Preferred Stock, the Company’s Series B 9% Convertible Preferred Stock or the
Company’s Series C 7% Convertible Preferred Stock), (B) subdivides outstanding
shares of Common Stock into a larger number of shares, (C) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a
smaller
number of shares, or (D) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event and the
number of shares issuable upon exercise of this Warrant shall be proportionately
adjusted. Any adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the determination
of
stockholders entitled to receive such dividend or distribution and shall
become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
(b) Subsequent
Equity Sales. If the Company or any Subsidiary thereof, as
applicable, 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 less than the then Exercise Price (such lower price,
the “Base Share Price” and such issuances collectively, a “Dilutive
Issuance”), 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 Exercise
Price, such issuance shall be deemed to have occurred for less than the Exercise
Price on such date of the Dilutive Issuance), then, the Exercise Price shall
be
reduced to equal the Base Share Price and the number of Warrant Shares issuable
hereunder shall be increased such that the aggregate Exercise Price payable
hereunder, after taking into account the decrease in the Exercise Price,
shall
be equal to the aggregate Exercise Price prior to such
adjustment. Such adjustment shall be made whenever such Common Stock
or Common Stock Equivalents are issued. The Company shall notify the
Holder in writing, no later than the Trading Day following the issuance of
any
Common Stock or Common Stock Equivalents subject to this section, indicating
therein the applicable issuance price, or of applicable reset price, exchange
price, conversion price and other pricing terms (such notice the “Dilutive
Issuance Notice”). For purposes of clarification, whether or not
the Company provides a Dilutive Issuance Notice pursuant to this Section
3(b),
upon the occurrence of any Dilutive Issuance, after the date of such Dilutive
Issuance the Holder is entitled to receive a number of Warrant Shares based
upon
the Base Share Price regardless of whether the Holder accurately refers to
the
Base Share Price in the Notice of Exercise.
(c) Pro
Rata Distributions. If the Company, at any time prior to the
Termination Date, shall distribute to all holders of Common Stock (and not
to
Holders of the Warrants) evidences of its indebtedness or assets or rights
or
warrants to subscribe for or purchase any security other than the Common
Stock
(which shall be subject to Section 3(b)), then in each such case the Exercise
Price shall be adjusted by multiplying the Exercise Price in effect immediately
prior to the record date fixed for determination of stockholders entitled
to
receive such distribution by a fraction of which the denominator shall be
the
VWAP determined as of the record date mentioned above, and of which the
numerator shall be such VWAP on such record date less the then per share
fair
market value at such record date of the portion of such assets or evidence
of
indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith. In
either case the adjustments shall be described in a statement provided to
the
Holders of the portion of assets or evidences of indebtedness so distributed
or
such subscription rights applicable to one share of Common
Stock. Such adjustment shall be made whenever any such distribution
is made and shall become effective immediately after the record date mentioned
above.
(d) Fundamental
Transaction. If, at any time while this Warrant is outstanding,
(A) the Company effects any merger or consolidation of the Company with or
into
another Person, (B) the Company effects any sale of all or substantially
all of
its assets in one or a series of related transactions, (C) 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 (D) 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 (in any such case, a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would
have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder, (a) upon exercise of
this
Warrant, the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation and any
additional consideration, and Alternate Consideration receivable upon or
as a
result of such reorganization, reclassification, merger, consolidation or
disposition of assets by a Holder of the number of shares of Common Stock
for
which this Warrant is exercisable immediately prior to such event or (b)
if the
Company is acquired in an all cash transaction, cash equal to the value of
this
Warrant as determined in accordance with the Black-Scholes option pricing
formula (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. To
the extent necessary to effectuate the foregoing provisions, any successor
to
the Company or surviving entity in such Fundamental Transaction shall issue
to
the Holder a new warrant consistent with the foregoing provisions and evidencing
the Holder’s right to exercise such warrant into Alternate
Consideration. 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 Section
3(d)
and insuring that this Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.
(e) Exempt
Issuance. Notwithstanding the foregoing, no adjustments,
Alternate Consideration nor notices shall be made, paid or issued under this
Section 3 in respect of an Exempt Issuance, or in respect of any issuance
of
Common Stock or Common Stock Equivalents upon conversion of the preferred
stock
or the exercise of warrants and/or options in connection with the
Plan.
(f) Calculations. All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. The number of shares
of Common Stock outstanding at any given time shall not include shares of
Common
Stock owned or held by or for the account of the Company, and the description
of
any such shares of Common Stock shall be considered on issue or sale of Common
Stock. For purposes of this Section 3, the number of shares of Common
Stock deemed to be issued and outstanding as of a given date shall be the
sum of
the number of shares of Common Stock (excluding treasury shares, if any)
issued
and outstanding.
(g) Voluntary
Adjustment By Company. The Company may at any time during the
term of this Warrant reduce the then current Exercise Price to any amount
and
for any period of time deemed appropriate by the Board of Directors of the
Company.
(h) Notice
to Holders.
(i) Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted
pursuant to this Section 3, the Company shall promptly mail to each Holder
a
notice setting forth the Exercise Price after such adjustment and setting
forth
a brief statement of the facts requiring such adjustment. If the
Company issues a variable rate security, despite the prohibition thereon
in the
Purchase Agreement, the Company shall be deemed to have issued Common Stock
or
Common Stock Equivalents at the lowest possible conversion or exercise price
at
which such securities may be converted or exercised in the case of a Variable
Rate Transaction (as defined in the Purchase Agreement), or the lowest possible
adjustment price in the case of an MFN Transaction (as defined in the Purchase
Agreement.
(ii) Notice
to Allow Exercise by ▇▇▇▇▇▇. If (A) the Company shall declare a
dividend (or any other distribution) on the Common Stock; (B) the Company
shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock; (C) the Company shall authorize the granting to all holders of the
Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights; (D) the approval of any stockholders
of the
Company shall be required in connection with any reclassification of the
Common
Stock, any consolidation or merger to which the Company is a party, any sale
or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary
or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be mailed to the
Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 20 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is
to be
taken for the purpose of such dividend, distribution, redemption, rights
or
warrants, or if a record is not to be taken, the date as of which the holders
of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer
or
share exchange; provided, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of
the
corporate action required to be specified in such notice. The Holder
is entitled to exercise this Warrant during the 20-day period commencing
on the
date of such notice to the effective date of the event triggering such
notice.
Section
4. Transfer
of Warrant.
(a) Transferability. Subject
to compliance with any applicable securities laws and the conditions set
forth
in Sections 5(a) and 4(d) hereof and to the provisions of Section 4.1 of
the
Purchase Agreement, this Warrant and all rights hereunder are transferable,
in
whole or in part, upon surrender of this Warrant at the principal office
of the
Company, together with a written assignment of this Warrant substantially
in the
form attached hereto duly executed by the Holder or its agent or attorney
and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of
the
assignee or assignees and in the denomination or denominations specified
in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant
shall
promptly be cancelled. A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having
a
new Warrant issued.
(b) New
Warrants. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in
which
new Warrants are to be issued, signed by the Holder or its agent or
attorney. Subject to compliance with Section 4(a), as to any transfer
which may be involved in such division or combination, the Company shall
execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants
to
be divided or combined in accordance with such notice.
(c) Warrant
Register. The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to
time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof
or
any distribution to the Holder, and for all other purposes, absent actual
notice
to the contrary.
(d) Transfer
Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant
shall
not be registered pursuant to an effective registration statement under the
Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer (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 shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the
effect that such transfer may be made without registration under the Securities
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)(1), (a)(2), (a)(3), (a)(7), or
(a)(8) promulgated under the Securities Act or a qualified institutional
buyer
as defined in Rule 144A(a) promulgated under the Securities Act.
Section
5. Miscellaneous.
(a) Title
to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 4 of this Warrant, this Warrant
and
all rights hereunder are transferable, in whole or in part, at the office
or
agency of the Company by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed. The transferee shall sign an investment letter in
form and substance reasonably satisfactory to the Company.
(b) No
Rights as Shareholder Until Exercise. This Warrant does not
entitle the Holder to any voting rights or other rights as a shareholder
of the
Company prior to the exercise hereof. Upon the surrender of this
Warrant and the payment of the aggregate Exercise Price (or by means of a
cashless exercise), the Warrant Shares so purchased shall be and be deemed
to be
issued to such Holder as the record owner of such shares as of the close
of
business on the later of the date of such surrender or payment.
(c) Loss,
Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any
stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which,
in
the case of the Warrant, shall not include the posting of any bond), and
upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
(d) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken
or
such right may be exercised on the next succeeding day not a Saturday, Sunday
or
legal holiday.
(e) Authorized
Shares. The Company covenants that during the period the Warrant
is outstanding, it will reserve from its authorized and unissued Common Stock
a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing
stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements
of
the Trading Market upon which the Common Stock may be listed.
Except
and to the extent as waived or consented to by the Holder, the Company shall
not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms
of this
Warrant, but will at all times in good faith assist in the carrying out of
all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant
against
impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase
in
par value, (b) take all such action as may be necessary or appropriate in
order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this
Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.
(f) Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of
the
Purchase Agreement.
(g) Restrictions. The
Holder acknowledges that the Warrant Shares acquired upon the exercise of
this
Warrant, if not registered, will have restrictions upon resale imposed by
state
and federal securities laws.
(h) Nonwaiver
and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver
of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover
any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting
any
amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers
or remedies hereunder.
(i) Notices. Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.
(j) Limitation
of Liability. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder,
shall
give rise to any liability of Holder for the purchase price of any Common
Stock
or as a stockholder of the Company, whether such liability is asserted by
the
Company or by creditors of the Company.
(k) Remedies. Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach
by it
of the provisions of this Warrant and hereby agrees to waive the defense
in any
action for specific performance that a remedy at law would be
adequate.
(l) Successors
and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit
of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Warrant
Shares.
(m) Amendment. This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.
(n) Severability. Wherever
possible, each provision of this Warrant shall be interpreted in such manner
as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions
of
this Warrant.
(o) Headings. The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
********************
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.
Dated: December
_____, 2007
By:
Name: ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
Title: President
|
Original
Date of Issuance: October 5, 2006
|
Reissuance
Date: December 19, 2007
|
|
Warrant
No.: _______________
|
Expires: October
5, 2011
|
NOTICE
OF EXERCISE
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full),
and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Payment
shall take the form of (check applicable box):
[
] in
lawful money of the United States; or
[
] the
cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 2(c), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 2(c).
(3) Please
issue a certificate or certificates representing said Warrant Shares in the
name
of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following:
_______________________________
_______________________________
_______________________________
(4) Accredited
Investor. The undersigned is an “accredited investor” as defined
in Regulation D promulgated under the Securities Act of 1933, as
amended.
[SIGNATURE
OF HOLDER]
Name
of
Investing
Entity: _______________________________________________________
Signature
of Authorized Signatory of Investing
Entity: _________________________________
Name
of
Authorized
Signatory: ___________________________________________________
Title
of
Authorized
Signatory: ____________________________________________________
Date: ________________________________________________________________________
|
Original
Date of Issuance: October 5, 2006
|
Reissuance
Date: December 19, 2007
|
|
Warrant
No.: ___________________
|
Expires: October
5, 2011
|
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute this form and supply required
information.
Do
not
use this form to exercise the warrant.)
FOR
VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________,
_______
Holder’s
Signature: _____________________________
Holder’s
Address: __________________________________________________________
Signature
Guaranteed: ___________________________________________
NOTE: The
signature to this Assignment Form must correspond with the name as it appears
on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to
assign
the foregoing Warrant.