Exhibit 10.2

 

WARRANT TO PURCHASE COMMON STOCK

 

THIS WARRANT AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

WARRANT TO PURCHASE COMMON STOCK

 

Number of Shares:

 

Up to [1,250,000] shares (subject to adjustment)

Warrant Price:

 

See Section 1.2 Below

Issuance Date:

 

May 28, 2004

Expiration Date:

 

May 28, 2007

 

THIS WARRANT CERTIFIES THAT for value received,             or its registered
assigns (hereinafter called the “Holder”) is entitled to purchase from
Diametrics Medical, Inc. (hereinafter called the “Company”), the above
referenced number of fully paid and nonassessable shares (the “Shares”) of
common stock (the “Common Stock”), of Company, at the Warrant Price per Share
referenced above; the number of shares purchasable upon exercise of this Warrant
referenced above being subject to adjustment from time to time as described
herein. This Warrant is issued in connection with that certain Subscription
Agreement dated as of May 28, 2004, by and between the Company and Holder (the
“Subscription Agreement”). The exercise of this Warrant shall be subject to the
provisions, limitations and restrictions contained herein.

 

1. Term and Exercise.

 

1.1 Term. This Warrant is exercisable in whole or in part (but not as to any
fractional share of Common Stock), at any time and from time to time after the
date hereof but prior to 6:00 p.m. on the Expiration Date set forth above.

 

1.2 Warrant Price.

 

The Warrant shall be exercisable at the lower of (i) the average of the lowest
ten inter-day closing prices of the Common Stock on the Over-the-Counter
Bulletin Board (the “OTC Bulletin Board”) during the 10 trading days immediately
preceding the exercise date or (ii) the closing price of the Common Stock on May
28, 2004. Such ten day period will be extended by the number of trading days
during such period on which (i) trading in the Common Stock is suspended by, or
not traded on the OTC Bulletin Board, (ii) after the date of the date of the
Registration Statement for the underlying Common Stock is declared ineffective
by the Securities and Exchange Commission (the “SEC”), and the prospectus
included in the Registration Statement for the underlying shares of Common Stock
may not be used by the holder for resale of the underlying shares of Common
Stock, or (iii) after the date the Registration Statement for the underlying
shares of Common Stock is declared effective by the SEC, the prospectus included
in the Registration Statement for the underlying shares of Common Stock may not
be used by the holder for the resale of underlying shares of Common stock of the
Series G Convertible Preferred Stock.

 

1.3 Maximum Number of Shares

 

The maximum number of Shares of Common Stock exercisable pursuant to this
Warrant is [1,250,000] Shares.

 

1.4 Procedure for Exercise of Warrant. Holder may exercise this Warrant by
delivering the following to the principal office of the Company in accordance
with Section 5.1 hereof: (i) a duly executed Notice of Exercise in substantially
the form attached as Schedule A, (ii) payment of the Warrant Price then in
effect for each of the Shares being purchased, as designated in the Notice of
Exercise, and (iii) this Warrant. Payment of the Warrant Price may be in cash,
certified or official bank check payable to the order of the Company, or wire
transfer of funds to the Company’s account (or any combination of any of the
foregoing) in the amount of the Warrant Price for each share being purchased.
Notwithstanding any provisions herein to the contrary, if the Current Market
Price (as defined below) is greater than the Warrant Price (at the date of
calculation, as set forth below), the Holder may elect to receive, without the
payment by the Holder of any additional consideration, shares of Common Stock
equal to the value of the “spread” on the Shares (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company in
accordance with Section 5.1, together with the Notice of Exercise, in which
event the Company shall issue to the Holder hereof a number of shares of Common
Stock computed using the following formula:

 

X = Y x (CMP-WP) CMP

 

Where:

  X   =   the number of shares of Common Stock to be issued to the Holder
pursuant to this net exercise     Y   =   the number of shares of Common Stock
purchasable under the Warrant or, if only a portion of the Warrant is being
exercised, that portion of the Warrant requested to be exercised     CMP   =  
the Current Market Price (as of the date of such calculation) of one share of
Common Stock     WP   =   the Warrant Price (as adjusted as of the date of such
calculation)

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For purposes of this Warrant, the “Current Market Price” of one share of Common
Stock as of a particular date shall be determined as follows: (i) if traded on a
national securities exchange or through the Nasdaq Stock Market, the Current
Market Price shall be deemed to be the volume weighted average trading price of
the Common Stock on such exchange as of five business days immediately prior to
the date of exercise indicated in the Notice of Exercise (or if no reported
sales took place on such day, the last date on which any such sales took place
prior to the date of exercise); (ii) if traded over-the-counter but not on the
Nasdaq Stock Market, the Current Market Price shall be deemed to be the average
of the closing bid and asked prices as of five business days immediately prior
to the date of exercise indicated in the Notice of Exercise; and (iii) if there
is no active public market, the Current Market Price shall be the fair market
value of the Common Stock as of the date of exercise, as determined in good
faith by the Board of Directors of the Company.

 

1.5 Delivery of Certificate and New Warrant. In the event of any exercise of the
rights represented by this Warrant, a certificate or certificates for the shares
of Common Stock so purchased, registered in the name of the Holder or such other
name or names as may be designated by the Holder, together with any other
securities or other property which the Holder is entitled to receive upon
exercise of this Warrant, shall be delivered to the Holder hereof, at the
Company’s expense, within a reasonable time, not exceeding fifteen (15) calendar
days, after the rights represented by this Warrant shall have been so exercised;
and, unless this Warrant has expired, a new Warrant representing the number of
Shares (except a remaining fractional share), if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the Holder
hereof within such time. The person in whose name any certificate for shares of
Common Stock is issued upon exercise of this Warrant shall for all purposes be
deemed to have become the holder of record of such shares on the date on which
the Warrant was surrendered and payment of the Warrant Price was received by the
Company, irrespective of the date of delivery of such certificate, except that,
if the date of such surrender and payment is on a date when the stock transfer
books of the Company are closed, such person shall be deemed to have become the
holder of such Shares at the close of business on the next succeeding date on
which the stock transfer books are open.

 

1.6 Restrictive Legend. Each certificate for Shares shall bear a restrictive
legend in substantially the form as follows, together with any additional legend
required by (i) any applicable state securities laws and (ii) any securities
exchange upon which such Shares may, at the time of such exercise, be listed:

 

“The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended and may not be sold, offered for sale,
transferred or pledged in the absence of such registration or an exemption
therefrom under such Act.”

 

Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend shall also bear such legend unless, in the
opinion of counsel for the Holder thereof (which counsel shall be reasonably
satisfactory to the Company), the securities represented thereby are not, at
such time, required by law to bear such legend.

 

1.7 Fractional Shares. No fractional Shares shall be issuable upon exercise or
conversion of the Warrant and the number of Shares to be issued shall be rounded
down to the nearest whole Share. If a fractional share interest arises upon any
exercise or conversion of the Warrant, the Company shall eliminate such
fractional share interest by paying to Holder an amount computed by multiplying
the fractional interest by the Current Market Price of a full Share.

 

2. Representations, Warranties and Covenants.

 

2.1 Representations and Warranties.

 

(a) The Company is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and has all necessary
power and authority to perform its obligations under this Warrant;

 

(b) The execution, delivery and performance of this Warrant has been duly
authorized by all necessary actions on the part of the Company and constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms; and

 

(c) This Warrant does not violate and is not in conflict with any of the
provisions of the Company’s Amended and Restated Articles of Incorporation or
Certificate of Designation, Bylaws and any resolutions of the Company’s Board of
Directors or stockholders, or any agreement of the Company, and no event has
occurred and no condition or circumstance exists that might (with or without
notice or lapse of time) constitute or result directly or indirectly in such a
violation or conflict.

 

2.2 Issuance of Shares. The Company covenants and agrees that all shares of
Common Stock that may be issued upon the exercise of the rights represented by
this Warrant will, upon issuance, be validly issued, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. The Company further covenants and agrees that it will pay when
due and payable any and all federal and state taxes which may be payable in
respect of the issue of this Warrant or any Common Stock or certificates
therefor issuable upon the exercise of this Warrant. The Company further
covenants and agrees that the Company will at all times have authorized and
reserved, free from preemptive rights, a sufficient number of shares of Common
Stock to provide for the exercise in full of the rights represented by this
Warrant. If at any time the number of authorized but unissued shares of Common
Stock of the Company shall not be sufficient to effect the exercise of the
Warrant in full, subject to the limitations set forth in Section 1.3 hereto,
then the Company will take all such corporate action as may, in the opinion of
counsel to the Company, be necessary or advisable to increase the number of its
authorized shares of Common Stock as shall be sufficient to permit the exercise
of the Warrant in full, subject to the limitations set forth in Section 1.3
hereto, including without limitation, using its best efforts to obtain any
necessary stockholder approval of such increase. The Company further covenants
and agrees that if any shares of capital stock to be reserved for the purpose of
the issuance of shares upon the exercise of this Warrant require registration
with or approval of any governmental authority under any federal or state law
before such shares may be validly issued or delivered upon exercise, then the
Company will in good faith and as expeditiously as possible endeavor to secure
such registration or approval, as the case may be. If and so long as the Common
Stock issuable upon the exercise of this Warrant is listed on any national
securities exchange or the Nasdaq Stock Market, the Company will, if permitted
by the rules of such exchange or market, list and keep listed on such exchange
or market, upon official notice of issuance, all shares of such Common Stock
issuable upon exercise of this Warrant.

 

3. Other Adjustments.

 

3.1 Subdivision or Combination of Shares. In case the Company shall at any time
subdivide its outstanding Common Stock into a greater number of shares or,
conversely, combine its outstanding Common Stock into a smaller number of
shares, the Warrant Price and the number of shares purchasable hereunder shall
be proportionately adjusted.

 

3.2 Dividends in Common Stock, Other Stock or Property. If at any time or from
time to time the holders of Common Stock (or any shares of stock or other
securities at the time receivable upon the exercise of this Warrant) shall have
received or become entitled to receive, without payment therefor:

 

(a) Common Stock, Options or any shares or other securities which are at any
time directly or indirectly convertible into or exchangeable for Common Stock,
or any rights or options to subscribe for, purchase or otherwise acquire any of
the foregoing by way of dividend or other distribution;

 

(b) any cash paid or payable otherwise than as a regular cash dividend; or

 

(c) Common Stock or additional shares or other securities or property (including
cash) by way of spin-off, split-up, reclassification, combination of shares or
similar corporate rearrangement (other than Common Stock issued as a stock split
or adjustments in respect of which shall be covered by the terms of Section 3.1
above) and additional shares, other securities or property issued in connection
with a Change (as defined below) (which shall be covered by the terms of Section
3.4 below), then and in each such case, the Holder hereof shall, upon the
exercise of this Warrant, be entitled to receive, in addition to the number of
shares of Common Stock receivable thereupon, and without payment of any
additional consideration therefor, the amount of stock and other

 

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securities and property (including cash in the cases referred to in clause (b)
above and this clause (c)) which such Holder would hold on the date of such
exercise had such Holder been the holder of record of such Common Stock as of
the date on which holders of Common Stock received or became entitled to receive
such shares or all other additional stock and other securities and property.

 

3.3 Reorganization, Reclassification, Consolidation, Merger or Sale. If any
recapitalization, reclassification or reorganization of the share capital of the
Company, or any consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its shares and/or assets or other
transaction (including, without limitation, a sale of substantially all of its
assets followed by a liquidation) shall be effected in such a way that holders
of Common Stock shall be entitled to receive shares, securities or other assets
or property (a “Change”), then, as a condition of such Change, lawful and
adequate provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the Common Stock
of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby) such shares, securities or other
assets or property as may be issued or payable with respect to or in exchange
for the number of outstanding Common Stock which such Holder would have been
entitled to receive had such Holder exercised this Warrant immediately prior to
the consummation of such Change. The Company or its successor shall promptly
issue to Holder a new Warrant for such new securities or other property. The new
Warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to give effect to the adjustments provided for in this Section 3
including, without limitation, adjustments to the Warrant Price and to the
number of securities or property issuable upon exercise of the new Warrant. The
provisions of this Section 3.3 shall similarly apply to successive Changes.

 

4. Ownership and Transfer.

 

4.1 Ownership of This Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary until presentation of this Warrant for registration of transfer
as provided in this Section 4.

 

4.2 Transfer and Replacement. This Warrant and all rights hereunder are
transferable in whole or in part upon the books of the Company by the Holder
hereof in person or by duly authorized attorney, and a new Warrant or Warrants,
of the same tenor as this Warrant but registered in the name of the transferee
or transferees (and in the name of the Holder, if a partial transfer is
effected) shall be made and delivered by the Company upon surrender of this
Warrant duly endorsed, at the office of the Company in accordance with Section
5.1 hereof. Upon receipt by the Company of evidence reasonably satisfactory to
it of the loss, theft or destruction, and, in such case, of indemnity or
security reasonably satisfactory to it, and upon surrender of this Warrant if
mutilated, the Company will make and deliver a new Warrant of like tenor, in
lieu of this Warrant; provided that if the Holder hereof is an instrumentality
of a state or local government or an institutional holder or a nominee for such
an instrumentality or institutional holder an irrevocable agreement of indemnity
by such Holder shall be sufficient for all purposes of this Warrant, and no
evidence of loss or theft or destruction shall be necessary. This Warrant shall
be promptly cancelled by the Company upon the surrender hereof in connection
with any transfer or replacement. Except as otherwise provided above, in the
case of the loss, theft or destruction of a Warrant, the Company shall pay all
expenses, taxes and other charges payable in connection with any transfer or
replacement of this Warrant, other than income taxes and stock transfer taxes
(if any) payable in connection with a transfer of this Warrant, which shall be
payable by the Holder. Holder will not transfer this Warrant and the rights
hereunder except in compliance with federal and state securities laws and except
after providing evidence of such compliance reasonably satisfactory to the
Company.

 

5. Miscellaneous Provisions.

 

5.1 Notices. Any notice or other document required or permitted to be given or
delivered to the Holder shall be delivered or forwarded to the Holder at
            or to such other address or number as shall have been furnished to
the Company in writing by the Holder. Any notice or other document required or
permitted to be given or delivered to the Company shall be delivered or
forwarded to the Company at 3050 Centre Pointe Road, Minnesota 55113, Attention:
Chief Financial Officer (Facsimile No. 651/638-1197), with a copy to Dorsey &
Whitney LLP, 50 South Sixth Street, Suite 1500, Minneapolis, Minnesota 55402,
Attention: Kenneth L. Cutler, Esq. (Facsimile No. 612/340-7800), or to such
other address or number as shall have been furnished to Holder in writing by the
Company.

 

5.2 All notices, requests and approvals required by this Warrant shall be in
writing and shall be conclusively deemed to be given (i) when hand-delivered to
the other party, (ii) when received if sent by facsimile at the address and
number set forth above; provided that notices given by facsimile shall not be
effective, unless either (a) a duplicate copy of such facsimile notice is
promptly given by depositing the same in the mail, postage prepaid and addressed
to the party as set forth below or (b) the receiving party delivers a written
confirmation of receipt for such notice by any other method permitted under this
paragraph; and further provided that any notice given by facsimile received
after 5:00 p.m. (recipient’s time) or on a non-business day shall be deemed
received on the next business day; (iii) five (5) business days after deposit in
the United States mail, certified, return receipt requested, postage prepaid,
and addressed to the party as set forth below; or (iv) the next business day
after deposit with an international overnight delivery service, postage prepaid,
addressed to the party as set forth below with next business day delivery
guaranteed; provided that the sending party receives confirmation of delivery
from the delivery service provider.

 

5.3 No Rights as Shareholder; Limitation of Liability. This Warrant shall not
entitle the Holder to any of the rights of a shareholder of the Company except
upon exercise in accordance with the terms hereof. No provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Common Stock,
and no mere enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the Holder for the Warrant Price hereunder or as a
shareholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.

 

5.4 Governing Law. This Warrant shall be governed by and construed in accordance
with the laws of the State of Minnesota as applied to agreements among Minnesota
residents made and to be performed entirely within the State of Minnesota,
without giving effect to the conflict of law principles thereof.

 

5.5 Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company’s assets and/or securities. All of the
obligations of the Company relating to the Shares issuable upon the exercise of
this Warrant shall survive the exercise and termination of this Warrant. All of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the Holder.

 

5.6 Waiver, Amendments and Headings. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by both parties (either generally or in a particular instance and either
retroactively or prospectively). The headings in this Warrant are for purposes
of reference only and shall not affect the meaning or construction of any of the
provisions hereof.

 

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WARRANT TO PURCHASE COMMON STOCK

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer this 28th day of May, 2004.

 

COMPANY:

 

DIAMETRICS MEDICAL, INC.

By

 

 

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Print Name:

 

 

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Title:

 

 

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SCHEDULE A

 

FORM OF NOTICE OF EXERCISE

 

[To be signed only upon exercise of the Warrant]

 

TO BE EXECUTED BY THE REGISTERED HOLDER

TO EXERCISE THE WITHIN WARRANT

 

The undersigned hereby elects to purchase                      shares of Common
Stock (the “Shares”) of Diametrics Medical, Inc. under the Warrant to Purchase
Common Stock dated                     , which the undersigned is entitled to
purchase pursuant to the terms of such Warrant, and [check one]:

 

¨ Cash Exercise. The undersigned has delivered $                    , the
aggregate Warrant Price for                      Shares purchased herewith, in
full in cash or by certified or official bank check or wire transfer;

 

¨ Net Exercise. In exchange for the issuance of                      Shares, the
undersigned hereby agrees to surrender the right to purchase
                     shares of Common Stock pursuant to the net exercise
provisions set forth in Section 1.4 of the Warrant.

 

Please issue a certificate or certificates representing such shares of Common
Stock in the name of the undersigned or in such other name as is specified below
and in the denominations as is set forth below:

 

_____________________________________________________________________________________

[Type Name of Holder as it should appear on the stock certificate]

 

_____________________________________________________________________________________

[Requested Denominations – if no denomination is specified, a single certificate
will be issued]

 

The initial address of such Holder to be entered on the books of Company shall
be:

 

__________________________________________________

 

__________________________________________________

 

__________________________________________________

 

The undersigned hereby represents and warrants that the undersigned is acquiring
such shares for his own account for investment purposes only, and not for resale
or with a view to distribution of such shares or any part thereof.

 

By:

 

 

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Print Name:

 

 

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Title:

 

 

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Dated:

 

 

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FORM OF ASSIGNMENT

(ENTIRE)

 

[To be signed only upon transfer of entire Warrant]

 

TO BE EXECUTED BY THE REGISTERED HOLDER

TO TRANSFER THE WITHIN WARRANT

 

FOR VALUE RECEIVED                                 hereby sells, assigns and
transfers unto                              all rights of the undersigned under
and pursuant to the within Warrant, and the undersigned does hereby irrevocably
constitute and appoint                              Attorney to transfer the
said Warrant on the books of Diametrics Medical, Inc., with full power of
substitution.

 

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[Type Name of Holder]

By:

 

 

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Title:

 

 

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Dated:

 

 

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NOTICE

 

The signature to the foregoing Assignment must correspond exactly to the name as
written upon the face of the within Warrant, without alteration or enlargement
or any change whatsoever.

 

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FORM OF ASSIGNMENT

(PARTIAL)

 

[To be signed only upon partial transfer of Warrant]

 

TO BE EXECUTED BY THE REGISTERED HOLDER

TO TRANSFER THE WITHIN WARRANT

 

FOR VALUE RECEIVED                              hereby sells, assigns and
transfers unto                              (i) the rights of the undersigned to
purchase                              shares of Common Stock under and pursuant
to the within Warrant, and (ii) on a non-exclusive basis, all other rights of
the undersigned under and pursuant to the within Warrant, it being understood
that the undersigned shall retain, severally (and not jointly) with the
transferee(s) named herein, all rights assigned on such non-exclusive basis. The
undersigned does hereby irrevocably constitute and appoint
                             Attorney to transfer the said Warrant on the books
of Diametrics Medical, Inc., with full power of substitution.

 

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[Type Name of Holder]

By:

 

 

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Title:

 

 

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Dated:

 

 

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NOTICE

 

The signature to the foregoing Assignment must correspond exactly to the name as
written upon the face of the within Warrant, without alteration or enlargement
or any change whatsoever.