EXHIBIT 10.15

 

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS

EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON

TRANSFER SET FORTH IN SECTION 4 OF THIS WARRANT

 

Warrant No. 1

 

Number of Shares: 100,000

(subject to adjustment)

 

Effective Date of Issuance:  January 9, 2001

 

PLC SYSTEMS INC.

 

Common Stock Purchase Warrant

 

PLC Systems Inc., a Yukon Territory corporation (the “Company”), for value
received, hereby certifies that Prudential Vector Healthcare Group, a unit of
Prudential Securities Incorporated, or its registered assigns (the “Registered
Holder”), is entitled, subject to the terms and conditions set forth below, to
purchase from the Company, at any time or from time to time on or after the
Vesting Date (as defined in Section 8 hereof) and on or before 5:00 p.m. (Boston
time) on January 9, 2006, One Hundred Thousand (100,000) shares of Common Stock,
no par value per share, of the Company, at a purchase price of $1.00 per share. 
The shares purchasable upon exercise of this Warrant, and the purchase price per
share, each as adjusted from time to time pursuant to the provisions of this
Warrant, are hereinafter referred to as the “Warrant Shares” and the “Purchase
Price,” respectively.

 

1.             EXERCISE.

 

(A)           THIS WARRANT MAY BE EXERCISED BY THE REGISTERED HOLDER, IN WHOLE
OR IN PART, BY SURRENDERING THIS WARRANT, WITH THE PURCHASE FORM APPENDED HERETO
AS EXHIBIT I DULY EXECUTED BY THE REGISTERED HOLDER OR BY THE REGISTERED
HOLDER’S DULY AUTHORIZED ATTORNEY, AT THE PRINCIPAL OFFICE OF THE COMPANY, OR AT
SUCH OTHER OFFICE OR AGENCY AS THE COMPANY MAY DESIGNATE, ACCOMPANIED BY PAYMENT
IN FULL, IN LAWFUL MONEY OF THE UNITED STATES, OF THE PURCHASE PRICE PAYABLE IN
RESPECT OF THE NUMBER OF WARRANT SHARES PURCHASED UPON SUCH EXERCISE.

 

(B)           THE REGISTERED HOLDER MAY, AT ITS OPTION, ELECT TO PAY SOME OR ALL
OF THE PURCHASE PRICE PAYABLE UPON AN EXERCISE OF THIS WARRANT BY CANCELLING A
PORTION OF THIS WARRANT EXERCISABLE FOR SUCH NUMBER OF WARRANT SHARES AS IS
DETERMINED BY DIVIDING (I) THE TOTAL PURCHASE PRICE PAYABLE IN RESPECT OF THE
NUMBER OF WARRANT SHARES BEING PURCHASED UPON SUCH EXERCISE BY (II) THE EXCESS
OF THE FAIR MARKET VALUE PER SHARE OF COMMON STOCK (AS DEFINED BELOW) AS OF THE
EXERCISE DATE (AS DEFINED IN SUBSECTION 1(C) BELOW) OVER THE PURCHASE PRICE PER
SHARE.  IF THE REGISTERED HOLDER WISHES TO EXERCISE THIS WARRANT PURSUANT TO
THIS METHOD OF PAYMENT WITH RESPECT TO THE MAXIMUM NUMBER OF WARRANT SHARES
PURCHASABLE PURSUANT TO THIS METHOD, THEN THE NUMBER OF WARRANT SHARES SO
PURCHASABLE SHALL BE EQUAL TO THE TOTAL NUMBER OF WARRANT SHARES, MINUS THE
PRODUCT OBTAINED BY MULTIPLYING (X) THE TOTAL NUMBER OF WARRANT SHARES BY (Y) A
FRACTION, THE NUMERATOR OF WHICH SHALL BE THE PURCHASE PRICE PER SHARE AND THE
DENOMINATOR OF

 

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WHICH SHALL BE THE FAIR MARKET VALUE PER SHARE OF COMMON STOCK AS OF THE
EXERCISE DATE.  THE FAIR MARKET VALUE PER SHARE OF COMMON STOCK SHALL BE
DETERMINED AS FOLLOWS:

 

(I)            IF THE COMMON STOCK IS LISTED ON A NATIONAL SECURITIES EXCHANGE,
THE NASDAQ NATIONAL MARKET OR ANOTHER NATIONALLY RECOGNIZED TRADING SYSTEM AS OF
THE EXERCISE DATE, THE FAIR MARKET VALUE PER SHARE OF COMMON STOCK SHALL BE
DEEMED TO BE THE AVERAGE OF THE HIGH AND LOW REPORTED SALE PRICES PER SHARE OF
COMMON STOCK THEREON ON THE TRADING DAY IMMEDIATELY PRECEDING THE EXERCISE DATE
(PROVIDED THAT IF NO SUCH PRICE IS REPORTED ON SUCH DAY, THE FAIR MARKET VALUE
PER SHARE OF COMMON STOCK SHALL BE DETERMINED PURSUANT TO CLAUSE (II)).

 

(II)           IF THE COMMON STOCK IS NOT LISTED ON A NATIONAL SECURITIES
EXCHANGE, THE NASDAQ NATIONAL MARKET OR ANOTHER NATIONALLY RECOGNIZED TRADING
SYSTEM AS OF THE EXERCISE DATE, THE FAIR MARKET VALUE PER SHARE OF COMMON STOCK
SHALL BE DEEMED TO BE THE AMOUNT MOST RECENTLY DETERMINED BY THE BOARD OF
DIRECTORS TO REPRESENT THE FAIR MARKET VALUE PER SHARE OF THE COMMON STOCK
(INCLUDING WITHOUT LIMITATION A DETERMINATION FOR PURPOSES OF GRANTING COMMON
STOCK OPTIONS OR ISSUING COMMON STOCK UNDER AN EMPLOYEE BENEFIT PLAN OF THE
COMPANY); AND, UPON REQUEST OF THE REGISTERED HOLDER, THE BOARD OF DIRECTORS (OR
A REPRESENTATIVE THEREOF) SHALL PROMPTLY NOTIFY THE REGISTERED HOLDER OF THE
FAIR MARKET VALUE PER SHARE OF COMMON STOCK.  NOTWITHSTANDING THE FOREGOING, IF
THE BOARD OF DIRECTORS HAS NOT MADE SUCH A DETERMINATION WITHIN THE THREE-MONTH
PERIOD PRIOR TO THE EXERCISE DATE, THEN (A) THE BOARD OF DIRECTORS SHALL MAKE A
DETERMINATION OF THE FAIR MARKET VALUE PER SHARE OF THE COMMON STOCK WITHIN 15
DAYS OF A REQUEST BY THE REGISTERED HOLDER THAT IT DO SO, AND (B) THE EXERCISE
OF THIS WARRANT PURSUANT TO THIS SUBSECTION 1(B) SHALL BE DELAYED UNTIL SUCH
DETERMINATION IS MADE.

 

(C)           EACH EXERCISE OF THIS WARRANT SHALL BE DEEMED TO HAVE BEEN
EFFECTED IMMEDIATELY PRIOR TO THE CLOSE OF BUSINESS ON THE DAY ON WHICH THIS
WARRANT SHALL HAVE BEEN SURRENDERED TO THE COMPANY AS PROVIDED IN SUBSECTION
1(A) ABOVE (THE “EXERCISE DATE”).  AT SUCH TIME, THE PERSON OR PERSONS IN WHOSE
NAME OR NAMES ANY CERTIFICATES FOR WARRANT SHARES SHALL BE ISSUABLE UPON SUCH
EXERCISE AS PROVIDED IN SUBSECTION 1(D) BELOW SHALL BE DEEMED TO HAVE BECOME THE
HOLDER OR HOLDERS OF RECORD OF THE WARRANT SHARES REPRESENTED BY SUCH
CERTIFICATES.

 

(D)           AS SOON AS PRACTICABLE AFTER THE EXERCISE OF THIS WARRANT IN FULL
OR IN PART, AND IN ANY EVENT WITHIN 10 DAYS THEREAFTER, THE COMPANY, AT ITS
EXPENSE, WILL CAUSE TO BE ISSUED IN THE NAME OF, AND DELIVERED TO, THE
REGISTERED HOLDER, OR AS SUCH HOLDER (UPON PAYMENT BY SUCH HOLDER OF ANY
APPLICABLE TRANSFER TAXES) MAY DIRECT:

 

(I)            A CERTIFICATE OR CERTIFICATES FOR THE NUMBER OF FULL WARRANT
SHARES TO WHICH THE REGISTERED HOLDER SHALL BE ENTITLED UPON SUCH EXERCISE PLUS,
IN LIEU OF ANY FRACTIONAL SHARE TO WHICH THE REGISTERED HOLDER WOULD OTHERWISE
BE ENTITLED, CASH IN AN AMOUNT DETERMINED PURSUANT TO SECTION 3 HEREOF; AND

 

(II)           IN CASE SUCH EXERCISE IS IN PART ONLY, A NEW WARRANT OR WARRANTS
(DATED THE DATE HEREOF) OF LIKE TENOR, CALLING IN THE AGGREGATE ON THE FACE OR
FACES THEREOF FOR THE NUMBER OF WARRANT SHARES EQUAL (WITHOUT GIVING EFFECT TO
ANY ADJUSTMENT THEREIN) TO THE NUMBER OF SUCH SHARES CALLED FOR ON THE FACE OF
THIS WARRANT MINUS THE SUM OF (A) THE NUMBER OF SUCH SHARES PURCHASED BY THE
REGISTERED HOLDER UPON SUCH EXERCISE PLUS (B) THE NUMBER OF WARRANT

 

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SHARES (IF ANY) COVERED BY THE PORTION OF THIS WARRANT CANCELLED IN PAYMENT OF
THE PURCHASE PRICE PAYABLE UPON SUCH EXERCISE PURSUANT TO SUBSECTION 1(B) ABOVE.

 

(E)           ALL WARRANT SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT
PURSUANT TO THE TERMS HEREOF SHALL BE VALIDLY ISSUED, FULLY PAID AND
NONASSESSABLE AND FREE OF ANY PREEMPTIVE RIGHTS.  THE COMPANY SHALL PAY ALL
TAXES AND OTHER GOVERNMENTAL CHARGES THAT MAY BE IMPOSED WITH RESPECT TO THE
ISSUANCE OR DELIVERY THEREOF.  THE COMPANY SHALL NOT BE REQUIRED, HOWEVER, TO
PAY ANY TAX OR OTHER CHARGE IMPOSED IN CONNECTION WITH ANY TRANSFER INVOLVED IN
THE ISSUE OF ANY CERTIFICATE FOR WARRANT SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT IN ANY NAME OTHER THAN THAT OF THE REGISTERED HOLDER, AND IN SUCH CASE
THE COMPANY SHALL NOT BE REQUIRED TO ISSUE OR DELIVER ANY SHARE CERTIFICATE
UNTIL SUCH TAX OR OTHER CHARGE HAS BEEN PAID OR IT HAS BEEN ESTABLISHED TO THE
REASONABLE SATISFACTION OF THE COMPANY THAT NO SUCH TAX OR OTHER CHARGE IS DUE.

 

2.             ADJUSTMENTS.

 

(A)           DILUTING ISSUANCES.

 

(I)            DEFINITIONS.  FOR PURPOSES OF THIS SECTION 2, THE FOLLOWING
DEFINITIONS SHALL APPLY:

 

(A)          “OPTION” SHALL MEAN RIGHTS, OPTIONS OR WARRANTS TO SUBSCRIBE FOR,
PURCHASE OR OTHERWISE ACQUIRE COMMON STOCK OR CONVERTIBLE SECURITIES.

 

(B)           “ORIGINAL ISSUE DATE” SHALL MEAN THE EFFECTIVE DATE OF ISSUE OF
THIS WARRANT.

 

(C)           “CONVERTIBLE SECURITIES” SHALL MEAN ANY EVIDENCES OF INDEBTEDNESS,
SHARES OR OTHER SECURITIES DIRECTLY OR INDIRECTLY CONVERTIBLE INTO OR
EXCHANGEABLE FOR COMMON STOCK, BUT EXCLUDING OPTIONS.

 

(D)          “ADDITIONAL SHARES OF COMMON STOCK” SHALL MEAN ALL SHARES OF COMMON
STOCK ISSUED (OR, PURSUANT TO SUBSECTION 2(A)(III) BELOW, DEEMED TO BE ISSUED)
BY THE COMPANY AFTER THE ORIGINAL ISSUE DATE, OTHER THAN:

 

(I)            SHARES OF COMMON STOCK ISSUED OR ISSUABLE UPON CONVERSION OR
EXCHANGE OF ANY CONVERTIBLE SECURITIES OR EXERCISE OF ANY OPTIONS OUTSTANDING ON
THE ORIGINAL ISSUE DATE;

 

(II)           SHARES OF COMMON STOCK ISSUED OR ISSUABLE BY REASON OF A
DIVIDEND, STOCK SPLIT, SPLIT-UP OR OTHER DISTRIBUTION ON SHARES OF COMMON STOCK
THAT ARE COVERED BY SUBSECTIONS 2(B) OR 2(C) BELOW; OR

 

(III)         SHARES OF COMMON STOCK (OR OPTIONS WITH RESPECT THERETO) ISSUED OR
ISSUABLE TO EMPLOYEES OR DIRECTORS OF, OR CONSULTANTS TO, THE COMPANY PURSUANT
TO A PLAN OR

 

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ARRANGEMENT APPROVED BY THE BOARD OF DIRECTORS OF THE COMPANY OR A COMMITTEE
THEREOF.

 

(II)           NO ADJUSTMENT OF PURCHASE PRICE.  NO ADJUSTMENTS TO THE PURCHASE
PRICE SHALL BE MADE UNLESS THE CONSIDERATION PER SHARE (DETERMINED PURSUANT TO
SUBSECTION 2(A)(V)) FOR AN ADDITIONAL SHARE OF COMMON STOCK ISSUED OR DEEMED TO
BE ISSUED BY THE COMPANY IS LESS THAN THE PURCHASE PRICE IN EFFECT IMMEDIATELY
PRIOR TO THE ISSUE OF SUCH ADDITIONAL SHARES.

 

(III)          ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON
STOCK.  IF THE COMPANY AT ANY TIME OR FROM TIME TO TIME AFTER THE ORIGINAL ISSUE
DATE SHALL ISSUE ANY OPTIONS (EXCLUDING OPTIONS COVERED BY
SUBSECTION 2(A)(I)(D)(III) ABOVE) OR CONVERTIBLE SECURITIES OR SHALL FIX A
RECORD DATE FOR THE DETERMINATION OF HOLDERS OF ANY CLASS OF SECURITIES ENTITLED
TO RECEIVE ANY SUCH OPTIONS OR CONVERTIBLE SECURITIES, THEN THE MAXIMUM NUMBER
OF SHARES OF COMMON STOCK (AS SET FORTH IN THE INSTRUMENT RELATING THERETO
WITHOUT REGARD TO ANY PROVISION CONTAINED THEREIN FOR A SUBSEQUENT ADJUSTMENT OF
SUCH NUMBER) ISSUABLE UPON THE EXERCISE OF SUCH OPTIONS OR, IN THE CASE OF
CONVERTIBLE SECURITIES AND OPTIONS THEREFOR, THE CONVERSION OR EXCHANGE OF SUCH
CONVERTIBLE SECURITIES, SHALL BE DEEMED TO BE ADDITIONAL SHARES OF COMMON STOCK
ISSUED AS OF THE TIME OF SUCH ISSUE OR, IN CASE SUCH A RECORD DATE SHALL HAVE
BEEN FIXED, AS OF THE CLOSE OF BUSINESS ON SUCH RECORD DATE, PROVIDED THAT
ADDITIONAL SHARES OF COMMON STOCK SHALL NOT BE DEEMED TO HAVE BEEN ISSUED UNLESS
THE CONSIDERATION PER SHARE (DETERMINED PURSUANT TO SUBSECTION 2(A)(V) HEREOF)
OF SUCH ADDITIONAL SHARES OF COMMON STOCK WOULD BE LESS THAN THE PURCHASE PRICE
IN EFFECT ON THE DATE OF AND IMMEDIATELY PRIOR TO SUCH ISSUE, OR SUCH RECORD
DATE, AS THE CASE MAY BE, AND PROVIDED FURTHER THAT IN ANY SUCH CASE IN WHICH
ADDITIONAL SHARES OF COMMON STOCK ARE DEEMED TO BE ISSUED:

 

(A)          NO FURTHER ADJUSTMENT IN THE PURCHASE PRICE SHALL BE MADE UPON THE
SUBSEQUENT ISSUE OF CONVERTIBLE SECURITIES OR SHARES OF COMMON STOCK UPON THE
EXERCISE OF SUCH OPTIONS OR CONVERSION OR EXCHANGE OF SUCH CONVERTIBLE
SECURITIES;

 

(B)           IF SUCH OPTIONS OR CONVERTIBLE SECURITIES BY THEIR TERMS PROVIDE,
WITH THE PASSAGE OF TIME OR OTHERWISE, FOR ANY INCREASE OR DECREASE IN THE
CONSIDERATION PAYABLE TO THE COMPANY, THEN UPON THE EXERCISE, CONVERSION OR
EXCHANGE THEREOF, THE PURCHASE PRICE COMPUTED UPON THE ORIGINAL ISSUE THEREOF
(OR UPON THE OCCURRENCE OF A RECORD DATE WITH RESPECT THERETO), AND ANY
SUBSEQUENT ADJUSTMENTS BASED THEREON, SHALL, UPON ANY SUCH INCREASE OR DECREASE
BECOMING EFFECTIVE, BE RECOMPUTED TO REFLECT SUCH INCREASE OR DECREASE INSOFAR
AS IT AFFECTS SUCH OPTIONS OR THE RIGHTS OF CONVERSION OR EXCHANGE UNDER SUCH
CONVERTIBLE SECURITIES;

 

(C)           UPON THE EXPIRATION OR TERMINATION OF ANY SUCH UNEXERCISED OPTION,
THE PURCHASE PRICE SHALL NOT BE READJUSTED, BUT THE ADDITIONAL SHARES OF COMMON
STOCK DEEMED ISSUED AS THE RESULT OF THE ORIGINAL ISSUE OF SUCH OPTION SHALL NOT
BE DEEMED ISSUED FOR THE PURPOSES OF ANY SUBSEQUENT ADJUSTMENT OF THE PURCHASE
PRICE;

 

(D)          IN THE EVENT OF ANY CHANGE IN THE NUMBER OF SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE, CONVERSION OR EXCHANGE OF ANY SUCH OPTION OR
CONVERTIBLE SECURITY, INCLUDING, BUT NOT LIMITED TO, A CHANGE RESULTING FROM THE
ANTI-DILUTION PROVISIONS THEREOF, THE PURCHASE PRICE THEN IN EFFECT SHALL
FORTHWITH BE READJUSTED TO SUCH

 

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PURCHASE PRICE AS WOULD HAVE OBTAINED HAD THE ADJUSTMENT WHICH WAS MADE UPON THE
ISSUANCE OF SUCH OPTION OR CONVERTIBLE SECURITY NOT EXERCISED, CONVERTED OR
EXCHANGED PRIOR TO SUCH CHANGE BEEN MADE UPON THE BASIS OF SUCH CHANGE; AND

 

(E)           NO READJUSTMENT PURSUANT TO CLAUSE (B) OR (D) ABOVE SHALL HAVE THE
EFFECT OF INCREASING THE PURCHASE PRICE TO AN AMOUNT WHICH EXCEEDS THE LOWER OF
(I) THE PURCHASE PRICE ON THE ORIGINAL ADJUSTMENT DATE, OR (II) THE PURCHASE
PRICE THAT WOULD HAVE RESULTED FROM ANY ISSUANCES OF ADDITIONAL SHARES OF COMMON
STOCK BETWEEN THE ORIGINAL ADJUSTMENT DATE AND SUCH READJUSTMENT DATE.

 

In the event the Company, after the Original Issue Date, amends the terms of any
such Options or Convertible Securities (whether such Options or Convertible
Securities were outstanding on the Original Issue Date or were issued after the
Original Issue Date), then such Options or Convertible Securities, as so
amended, shall be deemed to have been issued after the Original Issue Date and
the provisions of this subsection 2(a)(iii) shall apply.

 

(IV)          ADJUSTMENT OF PURCHASE PRICE UPON ISSUANCE OF ADDITIONAL SHARES OF
COMMON STOCK.

 

(A)          IN THE EVENT THE COMPANY SHALL AT ANY TIME AFTER THE ORIGINAL ISSUE
DATE ISSUE ADDITIONAL SHARES OF COMMON STOCK (INCLUDING ADDITIONAL SHARES OF
COMMON STOCK DEEMED TO BE ISSUED PURSUANT TO SUBSECTION 2(A)(III)), WITHOUT
CONSIDERATION OR FOR A CONSIDERATION PER SHARE LESS THAN THE PURCHASE PRICE IN
EFFECT IMMEDIATELY PRIOR TO SUCH ISSUE, THEN AND IN SUCH EVENT, SUCH PURCHASE
PRICE SHALL BE REDUCED, CONCURRENTLY WITH SUCH ISSUE, TO A PRICE (CALCULATED TO
THE NEAREST CENT) DETERMINED BY MULTIPLYING SUCH PURCHASE PRICE BY A FRACTION,
(A) THE NUMERATOR OF WHICH SHALL BE (1) THE NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING IMMEDIATELY PRIOR TO SUCH ISSUE PLUS (2) THE NUMBER OF SHARES OF
COMMON STOCK WHICH THE AGGREGATE CONSIDERATION RECEIVED OR TO BE RECEIVED BY THE
COMPANY FOR THE TOTAL NUMBER OF ADDITIONAL SHARES OF COMMON STOCK SO ISSUED
WOULD PURCHASE AT SUCH PURCHASE PRICE; AND (B) THE DENOMINATOR OF WHICH SHALL BE
THE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING IMMEDIATELY PRIOR TO SUCH ISSUE
PLUS THE NUMBER OF SUCH ADDITIONAL SHARES OF COMMON STOCK SO ISSUED; PROVIDED
THAT, (I) FOR THE PURPOSE OF THIS SUBSECTION 2(A)(IV), ALL SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE, CONVERSION OR EXCHANGE OF OPTIONS OR CONVERTIBLE
SECURITIES OUTSTANDING IMMEDIATELY PRIOR TO SUCH ISSUE SHALL BE DEEMED TO BE
OUTSTANDING, AND (II) THE NUMBER OF SHARES OF COMMON STOCK DEEMED ISSUABLE UPON
EXERCISE, CONVERSION OR EXCHANGE OF SUCH OUTSTANDING OPTIONS OR CONVERTIBLE
SECURITIES SHALL NOT GIVE EFFECT TO ANY ADJUSTMENTS TO THE EXERCISE, CONVERSION
OR EXCHANGE PRICE OR EXERCISE, CONVERSION OR EXCHANGE RATE OF SUCH OPTIONS OR
CONVERTIBLE SECURITIES RESULTING FROM THE ISSUANCE OF ADDITIONAL SHARES OF
COMMON STOCK THAT IS THE SUBJECT OF THIS CALCULATION.

 

(B)           NOTWITHSTANDING THE FOREGOING, THE APPLICABLE PURCHASE PRICE SHALL
NOT BE SO REDUCED AT SUCH TIME IF THE AMOUNT OF SUCH REDUCTION WOULD BE AN
AMOUNT LESS THAN $.05, BUT ANY SUCH AMOUNT SHALL BE CARRIED FORWARD AND
REDUCTION WITH RESPECT THERETO SHALL BE MADE AT THE TIME OF AND TOGETHER WITH
ANY SUBSEQUENT REDUCTION WHICH, TOGETHER WITH SUCH AMOUNT AND ANY OTHER AMOUNT
OR AMOUNTS SO CARRIED FORWARD, SHALL AGGREGATE $.05 OR MORE.

 

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(V)           DETERMINATION OF CONSIDERATION.  FOR PURPOSES OF THIS
SUBSECTION 2(A), THE CONSIDERATION RECEIVED BY THE COMPANY FOR THE ISSUE OF ANY
ADDITIONAL SHARES OF COMMON STOCK SHALL BE COMPUTED AS FOLLOWS:

 

(A)          CASH AND PROPERTY:  SUCH CONSIDERATION SHALL:

 

(I)            INSOFAR AS IT CONSISTS OF CASH, BE COMPUTED AT THE AGGREGATE OF
CASH RECEIVED BY THE COMPANY, EXCLUDING AMOUNTS PAID OR PAYABLE FOR ACCRUED
INTEREST;

 

(II)           INSOFAR AS IT CONSISTS OF PROPERTY OTHER THAN CASH, BE COMPUTED
AT THE FAIR MARKET VALUE THEREOF AT THE TIME OF SUCH ISSUE, AS DETERMINED IN
GOOD FAITH BY THE BOARD OF DIRECTORS; AND

 

(III)         IN THE EVENT ADDITIONAL SHARES OF COMMON STOCK ARE ISSUED TOGETHER
WITH OTHER SHARES OR SECURITIES OR OTHER ASSETS OF THE COMPANY FOR CONSIDERATION
WHICH COVERS BOTH, BE THE PROPORTION OF SUCH CONSIDERATION SO RECEIVED, COMPUTED
AS PROVIDED IN CLAUSES (I) AND (II) ABOVE, AS DETERMINED IN GOOD FAITH BY THE
BOARD OF DIRECTORS.

 

(B)           OPTIONS AND CONVERTIBLE SECURITIES.  THE CONSIDERATION PER SHARE
RECEIVED BY THE COMPANY FOR ADDITIONAL SHARES OF COMMON STOCK DEEMED TO HAVE
BEEN ISSUED PURSUANT TO SUBSECTION 2(A)(III), RELATING TO OPTIONS AND
CONVERTIBLE SECURITIES, SHALL BE DETERMINED BY DIVIDING

 

(x)            the total amount, if any, received or receivable by the Company
as consideration for the issue of such Options or Convertible Securities, plus
the minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the Company upon
the exercise of such Options or the conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion or exchange of
such Convertible Securities, by

 

(y)           the maximum number of shares of Common Stock (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible Securities.

 

(VI)          MULTIPLE CLOSING DATES.  IN THE EVENT THE COMPANY SHALL ISSUE ON
MORE THAN ONE DATE ADDITIONAL SHARES OF COMMON STOCK WHICH ARE COMPRISED OF
SHARES OF THE SAME SERIES OR CLASS OF PREFERRED STOCK, AND SUCH ISSUANCE DATES
OCCUR WITHIN A PERIOD OF NO MORE THAN 120 DAYS, THEN, UPON THE FINAL SUCH
ISSUANCE, THE PURCHASE PRICE SHALL BE READJUSTED TO GIVE EFFECT TO ALL SUCH
ISSUANCES AS IF THEY OCCURRED ON THE DATE OF THE FINAL SUCH ISSUANCE (AND
WITHOUT GIVING EFFECT TO ANY ADJUSTMENTS AS A RESULT OF SUCH PRIOR ISSUANCES
WITHIN SUCH PERIOD).

 

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(B)           ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS.  IF THE COMPANY
SHALL AT ANY TIME OR FROM TIME TO TIME AFTER THE ORIGINAL ISSUE DATE EFFECT A
SUBDIVISION OF THE OUTSTANDING COMMON STOCK, THE PURCHASE PRICE THEN IN EFFECT
IMMEDIATELY BEFORE THAT SUBDIVISION SHALL BE PROPORTIONATELY DECREASED.  IF THE
COMPANY SHALL AT ANY TIME OR FROM TIME TO TIME AFTER THE ORIGINAL ISSUE DATE
COMBINE THE OUTSTANDING SHARES OF COMMON STOCK, THE PURCHASE PRICE THEN IN
EFFECT IMMEDIATELY BEFORE THE COMBINATION SHALL BE PROPORTIONATELY INCREASED. 
ANY ADJUSTMENT UNDER THIS PARAGRAPH SHALL BECOME EFFECTIVE AT THE CLOSE OF
BUSINESS ON THE DATE THE SUBDIVISION OR COMBINATION BECOMES EFFECTIVE.

 

(C)           ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS.  IN THE EVENT
THE COMPANY AT ANY TIME, OR FROM TIME TO TIME AFTER THE ORIGINAL ISSUE DATE
SHALL MAKE OR ISSUE, OR FIX A RECORD DATE FOR THE DETERMINATION OF HOLDERS OF
COMMON STOCK ENTITLED TO RECEIVE, A DIVIDEND OR OTHER DISTRIBUTION PAYABLE IN
ADDITIONAL SHARES OF COMMON STOCK, THEN AND IN EACH SUCH EVENT THE PURCHASE
PRICE THEN IN EFFECT IMMEDIATELY BEFORE SUCH EVENT SHALL BE DECREASED AS OF THE
TIME OF SUCH ISSUANCE OR, IN THE EVENT SUCH A RECORD DATE SHALL HAVE BEEN FIXED,
AS OF THE CLOSE OF BUSINESS ON SUCH RECORD DATE, BY MULTIPLYING THE PURCHASE
PRICE THEN IN EFFECT BY A FRACTION:

 

(1)           the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and

 

(2)           the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution;

 

provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Purchase Price shall be recomputed accordingly as of the close of
business on such record date and thereafter the Purchase Price shall be adjusted
pursuant to this paragraph as of the time of actual payment of such dividends or
distributions.

 

(D)           ADJUSTMENT IN NUMBER OF WARRANT SHARES.  WHEN ANY ADJUSTMENT IS
REQUIRED TO BE MADE IN THE PURCHASE PRICE PURSUANT TO SUBSECTIONS 2(A), 2(B) OR
2(C), THE NUMBER OF WARRANT SHARES PURCHASABLE UPON THE EXERCISE OF THIS WARRANT
SHALL BE CHANGED TO THE NUMBER DETERMINED BY DIVIDING (I) AN AMOUNT EQUAL TO THE
NUMBER OF SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT IMMEDIATELY PRIOR TO
SUCH ADJUSTMENT, MULTIPLIED BY THE PURCHASE PRICE IN EFFECT IMMEDIATELY PRIOR TO
SUCH ADJUSTMENT, BY (II) THE PURCHASE PRICE IN EFFECT IMMEDIATELY AFTER SUCH
ADJUSTMENT.

 

(E)           ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS.  IN THE EVENT
THE COMPANY AT ANY TIME OR FROM TIME TO TIME AFTER THE ORIGINAL ISSUE DATE SHALL
MAKE OR ISSUE, OR FIX A RECORD DATE FOR THE DETERMINATION OF HOLDERS OF COMMON
STOCK ENTITLED TO RECEIVE, A DIVIDEND OR OTHER DISTRIBUTION PAYABLE IN
SECURITIES OF THE COMPANY (OTHER THAN SHARES OF COMMON STOCK) OR IN CASH OR
OTHER PROPERTY (OTHER THAN CASH OUT OF EARNINGS OR EARNED SURPLUS, DETERMINED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES), THEN AND IN EACH SUCH
EVENT PROVISION SHALL BE MADE SO THAT THE REGISTERED HOLDER SHALL RECEIVE UPON
EXERCISE HEREOF, IN

 

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ADDITION TO THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE HEREUNDER, THE KIND
AND AMOUNT OF SECURITIES OF THE COMPANY AND/OR CASH AND OTHER PROPERTY WHICH THE
REGISTERED HOLDER WOULD HAVE BEEN ENTITLED TO RECEIVE HAD THIS WARRANT BEEN
EXERCISED INTO COMMON STOCK ON THE DATE OF SUCH EVENT AND HAD THE REGISTERED
HOLDER THEREAFTER, DURING THE PERIOD FROM THE DATE OF SUCH EVENT TO AND
INCLUDING THE EXERCISE DATE, RETAINED ANY SUCH SECURITIES RECEIVABLE, GIVING
APPLICATION TO ALL ADJUSTMENTS CALLED FOR DURING SUCH PERIOD UNDER THIS SECTION
2 WITH RESPECT TO THE RIGHTS OF THE REGISTERED HOLDER.

 

(F)            ADJUSTMENT FOR MERGERS OR REORGANIZATIONS, ETC.  IF THERE SHALL
OCCUR ANY REORGANIZATION, RECAPITALIZATION, CONSOLIDATION OR MERGER INVOLVING
THE COMPANY IN WHICH THE COMMON STOCK IS CONVERTED INTO OR EXCHANGED FOR
SECURITIES, CASH OR OTHER PROPERTY (OTHER THAN A TRANSACTION COVERED BY
SUBSECTIONS 2(B), 2(C) OR 2(E)), THEN, FOLLOWING ANY SUCH REORGANIZATION,
RECAPITALIZATION, CONSOLIDATION OR MERGER, THE REGISTERED HOLDER SHALL RECEIVE
UPON EXERCISE HEREOF THE KIND AND AMOUNT OF SECURITIES, CASH OR OTHER PROPERTY
WHICH THE REGISTERED HOLDER WOULD HAVE BEEN ENTITLED TO RECEIVE IF, IMMEDIATELY
PRIOR TO SUCH REORGANIZATION, RECAPITALIZATION, CONSOLIDATION OR MERGER, THE
REGISTERED HOLDER HAD HELD THE NUMBER OF SHARES OF COMMON STOCK SUBJECT TO THIS
WARRANT. IN ANY SUCH CASE, APPROPRIATE ADJUSTMENT (AS DETERMINED IN GOOD FAITH
BY THE BOARD OF DIRECTORS OF THE COMPANY) SHALL BE MADE IN THE APPLICATION OF
THE PROVISIONS SET FORTH HEREIN WITH RESPECT TO THE RIGHTS AND INTERESTS
THEREAFTER OF THE REGISTERED HOLDER, TO THE END THAT THE PROVISIONS SET FORTH IN
THIS SECTION 2 (INCLUDING PROVISIONS WITH RESPECT TO CHANGES IN AND OTHER
ADJUSTMENTS OF THE PURCHASE PRICE) SHALL THEREAFTER BE APPLICABLE, AS NEARLY AS
REASONABLY MAY BE, IN RELATION TO ANY SECURITIES, CASH OR OTHER PROPERTY
THEREAFTER DELIVERABLE UPON THE EXERCISE OF THIS WARRANT.

 

(G)           CERTIFICATE AS TO ADJUSTMENTS.  UPON THE OCCURRENCE OF EACH
ADJUSTMENT OR READJUSTMENT OF THE PURCHASE PRICE PURSUANT TO THIS SECTION 2, THE
COMPANY AT ITS EXPENSE SHALL PROMPTLY COMPUTE SUCH ADJUSTMENT OR READJUSTMENT IN
ACCORDANCE WITH THE TERMS HEREOF AND FURNISH TO THE REGISTERED HOLDER A
CERTIFICATE SETTING FORTH SUCH ADJUSTMENT OR READJUSTMENT (INCLUDING THE KIND
AND AMOUNT OF SECURITIES, CASH OR OTHER PROPERTY FOR WHICH THIS WARRANT SHALL BE
EXERCISABLE AND THE PURCHASE PRICE) AND SHOWING IN DETAIL THE FACTS UPON WHICH
SUCH ADJUSTMENT OR READJUSTMENT IS BASED.  THE COMPANY SHALL, UPON THE WRITTEN
REQUEST AT ANY TIME OF THE REGISTERED HOLDER, FURNISH OR CAUSE TO BE FURNISHED
TO THE REGISTERED HOLDER A CERTIFICATE SETTING FORTH (I) THE PURCHASE PRICE THEN
IN EFFECT AND (II) THE NUMBER OF SHARES OF COMMON STOCK AND THE AMOUNT, IF ANY,
OF OTHER SECURITIES, CASH OR PROPERTY WHICH THEN WOULD BE RECEIVED UPON THE
EXERCISE OF THIS WARRANT.

 

3.             FRACTIONAL SHARES.  THE COMPANY SHALL NOT BE REQUIRED UPON THE
EXERCISE OF THIS WARRANT TO ISSUE ANY FRACTIONAL SHARES, BUT SHALL MAKE AN
ADJUSTMENT THEREFOR IN CASH ON THE BASIS OF THE FAIR MARKET VALUE PER SHARE OF
COMMON STOCK, AS DETERMINED PURSUANT TO SUBSECTION 1(B) ABOVE.

 

4.             REQUIREMENTS FOR TRANSFER.

 

(A)           THIS WARRANT AND THE WARRANT SHARES SHALL NOT BE SOLD OR
TRANSFERRED UNLESS EITHER (I) THEY FIRST SHALL HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR (II) THE COMPANY FIRST SHALL
HAVE BEEN FURNISHED WITH AN OPINION OF LEGAL

 

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COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT.

 

(B)           NOTWITHSTANDING THE FOREGOING, NO REGISTRATION OR OPINION OF
COUNSEL SHALL BE REQUIRED FOR (I) A TRANSFER BY A REGISTERED HOLDER WHICH IS A
CORPORATION TO A WHOLLY OWNED SUBSIDIARY OF SUCH CORPORATION, A TRANSFER BY A
REGISTERED HOLDER WHICH IS A PARTNERSHIP TO A PARTNER OF SUCH PARTNERSHIP OR A
RETIRED PARTNER OF SUCH PARTNERSHIP OR TO THE ESTATE OF ANY SUCH PARTNER OR
RETIRED PARTNER, OR A TRANSFER BY A REGISTERED HOLDER WHICH IS A LIMITED
LIABILITY COMPANY TO A MEMBER OF SUCH LIMITED LIABILITY COMPANY OR A RETIRED
MEMBER OR TO THE ESTATE OF ANY SUCH MEMBER OR RETIRED MEMBER, PROVIDED THAT THE
TRANSFEREE IN EACH CASE AGREES IN WRITING TO BE SUBJECT TO THE TERMS OF THIS
SECTION 4, OR (II) A TRANSFER MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT.

 

(C)           EACH CERTIFICATE REPRESENTING WARRANT SHARES SHALL BEAR A LEGEND
SUBSTANTIALLY IN THE FOLLOWING FORM:

 

“The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended, and may not be offered, sold or
otherwise transferred, pledged or hypothecated unless and until such securities
are registered under such Act or an opinion of counsel satisfactory to the
Company is obtained to the effect that such registration is not required.”

 

The foregoing legend shall be removed from the certificates representing any
Warrant Shares, at the request of the holder thereof, at such time as they
become eligible for resale pursuant to Rule 144(k) under the Act.

 

5.             NO IMPAIRMENT.  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 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 ACTION AS MAY BE NECESSARY OR APPROPRIATE IN ORDER
TO PROTECT THE RIGHTS OF THE HOLDER OF THIS WARRANT AGAINST IMPAIRMENT.

 

6.             NOTICES OF RECORD DATE, ETC.  IN THE EVENT:

 

(A)           THE COMPANY SHALL TAKE A RECORD OF THE HOLDERS OF ITS COMMON STOCK
(OR OTHER STOCK OR SECURITIES AT THE TIME DELIVERABLE UPON THE EXERCISE OF THIS
WARRANT) FOR THE PURPOSE OF ENTITLING OR ENABLING THEM TO RECEIVE ANY DIVIDEND
OR OTHER DISTRIBUTION, OR TO RECEIVE ANY RIGHT TO SUBSCRIBE FOR OR PURCHASE ANY
SHARES OF STOCK OF ANY CLASS OR ANY OTHER SECURITIES, OR TO RECEIVE ANY OTHER
RIGHT; OR

 

(B)           OF ANY CAPITAL REORGANIZATION OF THE COMPANY, ANY RECLASSIFICATION
OF THE COMMON STOCK OF THE COMPANY, ANY CONSOLIDATION OR MERGER OF THE COMPANY
WITH OR INTO ANOTHER CORPORATION (OTHER THAN A CONSOLIDATION OR MERGER IN WHICH
THE COMPANY IS THE SURVIVING ENTITY AND ITS COMMON STOCK IS NOT CONVERTED INTO
OR EXCHANGED FOR ANY OTHER SECURITIES OR PROPERTY), OR ANY TRANSFER OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY; OR

 

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(C)           OF THE VOLUNTARY OR INVOLUNTARY DISSOLUTION, LIQUIDATION OR
WINDING-UP OF THE COMPANY,

 

then, and in each such case, the Company will mail or cause to be mailed to the
Registered Holder a notice specifying, as the case may be, (i) the record date
for such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, or (ii) the effective date on which such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or such other stock or
securities at the time deliverable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up.  Such notice shall be mailed at least ten days prior
to the record date or effective date for the event specified in such notice.

 

7.             RESERVATION AND LISTING OF STOCK.

 

(A)           THE COMPANY WILL AT ALL TIMES RESERVE AND KEEP AVAILABLE, SOLELY
FOR ISSUANCE AND DELIVERY UPON THE EXERCISE OF THIS WARRANT, SUCH NUMBER OF
WARRANT SHARES AND OTHER SECURITIES, CASH AND/OR PROPERTY, AS FROM TIME TO TIME
SHALL BE ISSUABLE UPON THE EXERCISE OF THIS WARRANT.

 

(B)           THE COMPANY SHALL PREPARE AND FILE WITH THE AMERICAN STOCK
EXCHANGE (OR SUCH OTHER SECURITIES EXCHANGE OR AUTOMATED QUOTATION SYSTEM ON
WHICH THE COMMON STOCK OF THE COMPANY IS THEN LISTED) (THE “APPLICABLE STOCK
EXCHANGE”) AN APPLICATION (THE “LISTING APPLICATION”) TO LIST THE WARRANT SHARES
ON THE APPLICABLE STOCK EXCHANGE.  THE COMPANY SHALL PROMPTLY NOTIFY THE
REGISTERED HOLDER OF THE APPROVAL OF THE LISTING APPLICATION.

 

8.             VESTING DATE.  AS USED HEREIN, THE TERM “VESTING DATE” SHALL MEAN
THE EARLIEST TO OCCUR OF (I) THE DATE OF APPROVAL OF THE LISTING APPLICATION BY
THE APPLICABLE STOCK EXCHANGE; (II) THE DATE ON WHICH THE COMPANY’S COMMON STOCK
CEASES TO BE LISTED ON THE AMERICAN STOCK EXCHANGE OR LISTED OR QUOTED ON
ANOTHER SECURITIES EXCHANGE OR AUTOMATED QUOTATION SYSTEM WHICH REQUIRES THAT
THE COMPANY LIST THE WARRANT SHARES; AND (III) THE DATE OF ANY REORGANIZATION,
RECAPITALIZATION, CONSOLIDATION OR MERGER INVOLVING THE COMPANY IN WHICH THE
COMMON STOCK IS CONVERTED INTO OR EXCHANGED FOR SECURITIES, CASH OR OTHER
PROPERTY (OTHER THAN A TRANSACTION COVERED BY SUBSECTIONS 2(B), 2(C) OR 2(E)).

 

9.             EXCHANGE OF WARRANTS.  UPON THE SURRENDER BY THE REGISTERED
HOLDER, PROPERLY ENDORSED, TO THE COMPANY AT THE PRINCIPAL OFFICE OF THE
COMPANY, THE COMPANY WILL, SUBJECT TO THE PROVISIONS OF SECTION 4 HEREOF, ISSUE
AND DELIVER TO OR UPON THE ORDER OF SUCH HOLDER, AT THE COMPANY’S EXPENSE, A NEW
WARRANT OR WARRANTS OF LIKE TENOR, IN THE NAME OF THE REGISTERED HOLDER OR AS
THE REGISTERED HOLDER (UPON PAYMENT BY THE REGISTERED HOLDER OF ANY APPLICABLE
TRANSFER TAXES) MAY DIRECT, CALLING IN THE AGGREGATE ON THE FACE OR FACES
THEREOF FOR THE NUMBER OF SHARES OF COMMON STOCK (OR OTHER SECURITIES, CASH
AND/OR PROPERTY) THEN ISSUABLE UPON EXERCISE OF THIS WARRANT.

 

10

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10.           REPLACEMENT OF WARRANTS.  UPON RECEIPT OF EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY OF THE LOSS, THEFT, DESTRUCTION OR MUTILATION OF
THIS WARRANT AND (IN THE CASE OF LOSS, THEFT OR DESTRUCTION) UPON DELIVERY OF AN
INDEMNITY AGREEMENT (WITH SURETY IF REASONABLY REQUIRED) IN AN AMOUNT REASONABLY
SATISFACTORY TO THE COMPANY, OR (IN THE CASE OF MUTILATION) UPON SURRENDER AND
CANCELLATION OF THIS WARRANT, THE COMPANY WILL ISSUE, IN LIEU THEREOF, A NEW
WARRANT OF LIKE TENOR.

 

11.           TRANSFERS, ETC.

 

(A)           THE COMPANY WILL MAINTAIN A REGISTER CONTAINING THE NAME AND
ADDRESS OF THE REGISTERED HOLDER OF THIS WARRANT.  THE REGISTERED HOLDER MAY
CHANGE ITS OR HIS ADDRESS AS SHOWN ON THE WARRANT REGISTER BY WRITTEN NOTICE TO
THE COMPANY REQUESTING SUCH CHANGE.

 

(B)           SUBJECT TO THE PROVISIONS OF SECTION 4 HEREOF, THIS WARRANT AND
ALL RIGHTS HEREUNDER ARE TRANSFERABLE, IN WHOLE OR IN PART, UPON SURRENDER OF
THIS WARRANT WITH A PROPERLY EXECUTED ASSIGNMENT (IN THE FORM OF EXHIBIT II
HERETO) AT THE PRINCIPAL OFFICE OF THE COMPANY.

 

(C)           UNTIL ANY TRANSFER OF THIS WARRANT IS MADE IN THE WARRANT
REGISTER, THE COMPANY MAY TREAT THE REGISTERED HOLDER AS THE ABSOLUTE OWNER
HEREOF FOR ALL PURPOSES; PROVIDED, HOWEVER, THAT IF AND WHEN THIS WARRANT IS
PROPERLY ASSIGNED IN BLANK, THE COMPANY MAY (BUT SHALL NOT BE OBLIGATED TO)
TREAT THE BEARER HEREOF AS THE ABSOLUTE OWNER HEREOF FOR ALL PURPOSES,
NOTWITHSTANDING ANY NOTICE TO THE CONTRARY.

 

12.           REPRESENTATIONS OF THE REGISTERED HOLDER.  THE REGISTERED HOLDER
OF THIS WARRANT REPRESENTS AND WARRANTS TO THE COMPANY AS FOLLOWS:

 

(A)           INVESTMENT.  THE REGISTERED HOLDER IS ACQUIRING THIS WARRANT AND
THE WARRANT SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT, FOR ITS OWN
ACCOUNT FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR SALE IN CONNECTION WITH,
ANY DISTRIBUTION THEREOF, NOR WITH ANY PRESENT INTENTION OF DISTRIBUTING OR
SELLING THE SAME, EXCEPT AS OTHERWISE MAY BE PERMITTED UNDER APPLICABLE
SECURITIES LAWS.

 

(B)           AUTHORITY.  THE REGISTERED HOLDER HAS FULL POWER AND AUTHORITY TO
ENTER INTO AND TO PERFORM THIS WARRANT IN ACCORDANCE WITH ITS TERMS.  THE
REGISTERED HOLDER HAS NOT BEEN ORGANIZED, REORGANIZED OR RECAPITALIZED
SPECIFICALLY FOR THE PURPOSE OF INVESTING IN THE COMPANY.

 

(C)           EXPERIENCE.  THE REGISTERED HOLDER HAS MADE DETAILED INQUIRY
CONCERNING THE COMPANY, ITS BUSINESS AND ITS PERSONNEL; THE OFFICERS OF THE
COMPANY HAVE MADE AVAILABLE TO THE REGISTERED HOLDER THE OPPORTUNITY TO ASK
QUESTIONS AND RECEIVE ANSWERS CONCERNING THE TERMS AND CONDITIONS OF THIS
WARRANT AND THE WARRANT SHARES AND TO OBTAIN ANY ADDITIONAL INFORMATION THAT THE
COMPANY POSSESSES OR CAN ACQUIRE WITHOUT UNREASONABLE EFFORT OR EXPENSE THAT IS
NECESSARY TO VERIFY THE ACCURACY OF INFORMATION PROVIDED BY THE COMPANY TO THE
REGISTERED HOLDER; AND THE REGISTERED HOLDER HAS ADEQUATE NET WORTH AND MEANS OF
PROVIDING FOR HIS OR ITS CURRENT NEEDS AND PERSONAL CONTINGENCIES TO SUSTAIN A
COMPLETE LOSS OF HIS OR ITS INVESTMENT IN THE COMPANY; THE REGISTERED HOLDER’S
OVERALL COMMITMENT TO INVESTMENTS WHICH ARE NOT READILY MARKETABLE IS NOT
DISPROPORTIONATE TO HIS OR ITS NET WORTH AND THE REGISTERED HOLDER’S INVESTMENT

 

11

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IN THIS WARRANT AND THE WARRANT SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
WILL NOT CAUSE SUCH OVERALL COMMITMENT TO BECOME EXCESSIVE.

 

(D)           ACCREDITED INVESTOR.  THE REGISTERED HOLDER IS AN ACCREDITED
INVESTOR WITHIN THE DEFINITION SET FORTH IN RULE 501(A) PROMULGATED UNDER THE
SECURITIES ACT.

 

13.           MAILING OF NOTICES, ETC.  ALL NOTICES AND OTHER COMMUNICATIONS
FROM THE COMPANY TO THE REGISTERED HOLDER SHALL BE MAILED BY FIRST-CLASS
CERTIFIED OR REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS LAST FURNISHED TO
THE COMPANY IN WRITING BY THE REGISTERED HOLDER.  ALL NOTICES AND OTHER
COMMUNICATIONS FROM THE REGISTERED HOLDER OR IN CONNECTION HEREWITH TO THE
COMPANY SHALL BE MAILED BY FIRST-CLASS CERTIFIED OR REGISTERED MAIL, POSTAGE
PREPAID, TO THE COMPANY AT ITS PRINCIPAL OFFICE SET FORTH BELOW.  IF THE COMPANY
SHOULD AT ANY TIME CHANGE THE LOCATION OF ITS PRINCIPAL OFFICE TO A PLACE OTHER
THAN AS SET FORTH BELOW, IT SHALL GIVE PROMPT WRITTEN NOTICE TO THE REGISTERED
HOLDER AND THEREAFTER ALL REFERENCES IN THIS WARRANT TO THE LOCATION OF ITS
PRINCIPAL OFFICE AT THE PARTICULAR TIME SHALL BE AS SO SPECIFIED IN SUCH NOTICE.

 

14.           NO RIGHTS AS STOCKHOLDER.  UNTIL THE EXERCISE OF THIS WARRANT, THE
REGISTERED HOLDER SHALL NOT HAVE OR EXERCISE ANY RIGHTS BY VIRTUE HEREOF AS A
STOCKHOLDER OF THE COMPANY.  NOTWITHSTANDING THE FOREGOING, IN THE EVENT (I) THE
COMPANY EFFECTS A SPLIT OF THE COMMON STOCK BY MEANS OF A STOCK DIVIDEND AND THE
PURCHASE PRICE OF AND THE NUMBER OF WARRANT SHARES ARE ADJUSTED AS OF THE DATE
OF THE DISTRIBUTION OF THE DIVIDEND (RATHER THAN AS OF THE RECORD DATE FOR SUCH
DIVIDEND), AND (II) THE REGISTERED HOLDER EXERCISES THIS WARRANT BETWEEN THE
RECORD DATE AND THE DISTRIBUTION DATE FOR SUCH STOCK DIVIDEND, THE REGISTERED
HOLDER SHALL BE ENTITLED TO RECEIVE, ON THE DISTRIBUTION DATE, THE STOCK
DIVIDEND WITH RESPECT TO THE SHARES OF COMMON STOCK ACQUIRED UPON SUCH EXERCISE,
NOTWITHSTANDING THE FACT THAT SUCH SHARES WERE NOT OUTSTANDING AS OF THE CLOSE
OF BUSINESS ON THE RECORD DATE FOR SUCH STOCK DIVIDEND.

 

15.           CHANGE OR WAIVER.  ANY TERM OF THIS WARRANT MAY BE CHANGED OR
WAIVED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTY AGAINST WHICH
ENFORCEMENT OF THE CHANGE OR WAIVER IS SOUGHT.

 

16.           SECTION HEADINGS.  THE SECTION HEADINGS IN THIS WARRANT ARE FOR
THE CONVENIENCE OF THE PARTIES AND IN NO WAY ALTER, MODIFY, AMEND, LIMIT OR
RESTRICT THE CONTRACTUAL OBLIGATIONS OF THE PARTIES.

 

17.           GOVERNING LAW.  THIS WARRANT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT
REFERENCE TO THE CONFLICTS OF LAW PROVISIONS THEREOF).

 

18.           SUPPLYING INFORMATION.  THE COMPANY SHALL COOPERATE WITH EACH
REGISTERED HOLDER OF A WARRANT IN SUPPLYING SUCH INFORMATION AS MAY BE
REASONABLY NECESSARY FOR SUCH HOLDER TO COMPLETE AND FILE ANY INFORMATION
REPORTING FORMS PRESENTLY OR HEREAFTER REQUIRED BY THE SECURITIES AND EXCHANGE
COMMISSION AS A CONDITION TO THE AVAILABILITY OF AN EXEMPTION FROM THE
SECURITIES ACT FOR THE SALE OF ANY WARRANT.

 

19.           LIMITATION OF LIABILITY.  NO PROVISION HEREOF, IN THE ABSENCE OF
AFFIRMATIVE ACTION BY THE HOLDER TO PURCHASE WARRANT SHARES, AND NO ENUMERATION
HEREIN OF THE RIGHTS OR PRIVILEGES OF THE REGISTERED HOLDER HEREOF, SHALL GIVE
RISE TO ANY LIABILITY OF SUCH REGISTERED HOLDER FOR THE

 

12

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PURCHASE PRICE OF ANY WARRANT SHARES OR AS A SHAREHOLDER OF THE COMPANY, WHETHER
SUCH LIABILITY IS ASSERTED BY THE COMPANY OR BY CREDITORS OF THE COMPANY.

 

20.           REMEDIES.  EACH REGISTERED HOLDER OF THE WARRANT AND WARRANT
SHARES, 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 HEREUNDER.  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 THE WARRANT AND HEREBY AGREES TO WAIVE THE DEFENSE IN ANY ACTION
FOR SPECIFIC PERFORMANCE THAT A REMEDY AT LAW WOULD BE ADEQUATE.

 

21.           SUCCESSORS AND ASSIGNS.  SUBJECT TO THE PROVISIONS OF SECTIONS
11(C), THIS WARRANT AND RIGHTS EVIDENCED HEREBY SHALL INURE TO THE BENEFIT OF
AND BE BINDING UPON THE SUCCESSORS OF THE COMPANY AND THE SUCCESSORS AND ASSIGNS
OF THE REGISTERED HOLDER.  THE PROVISIONS OF THIS WARRANT ARE INTENDED TO BE FOR
THE BENEFIT OF ALL THE REGISTERED HOLDERS FROM TIME TO TIME OF THIS WARRANT AND
SHALL BE ENFORCEABLE BY ANY SUCH HOLDER.

 

22.           AMENDMENT.  THIS WARRANT AND ALL OTHER WARRANTS MAY BE MODIFIED OR
AMENDED OR THE PROVISIONS HEREOF WAIVED WITH THE WRITTEN CONSENT OF THE COMPANY
AND THE REGISTERED HOLDER.

 

23.           SEVERABILITY.  WHENEVER 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 IS HELD TO BE PROHIBITED BY
OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION WILL BE INEFFECTIVE ONLY TO THE
EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF
THIS WARRANT.

 

EXECUTED effective as of the date of issuance indicated above.

 

 

PLC SYSTEMS INC.

 

 

 

 

By:

 

/s/ James G. Thomasch

 

 

Title:

Vice President and

 

 

Chief Financial Officer

 

 

 

 

 

 

ATTEST:

 

 

 

 

 

/s/ Michelle Cannata

 

 

 

 

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EXHIBIT I

 

PURCHASE FORM

 

To:                               

 

Dated:                               

 

The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.       ), hereby irrevocably elects to purchase (check applicable box):

 

o                          shares of the Common Stock covered by such Warrant;
or

 

o            the maximum number of shares of Common Stock covered by such
Warrant pursuant to the cashless exercise procedure set forth in Section 1(b).

 

The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is
$             .  Such payment takes the form of (check applicable box or boxes):

 

o            $              in lawful money of the United States; and/or

 

o            the cancellation of such portion of the attached Warrant as is
exercisable for a total of               Warrant Shares (using a Fair Market
Value of $              per share for purposes of this calculation); and/or

 

o            the cancellation of such number of Warrant Shares as is necessary,
in accordance with the formula set forth in Section 1(b), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in Section 1(b).

 

 

Signature:

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

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EXHIBIT II

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED,
                                                                               
hereby sells, assigns and transfers all of the rights of the undersigned under
the attached Warrant (No.           ) with respect to the number of shares of
Common Stock covered thereby set forth below, unto:

 

Name of Assignee

 

Address

 

No. of Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dated:

 

 

Signature:

 

 

 

 

 

Signature Guaranteed:

 

 

By:

 

 

 

The signature should be guaranteed by an

 

 

eligible guarantor institution (banks,

 

 

stockbrokers, savings and loan associations

 

 

and credit unions with membership in an

 

 

approved signature guarantee medallion

 

 

program) pursuant to Rule 17Ad-15 under

 

 

the Securities Exchange Act of 1934.

 

 

 

 

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