Document:

Exhibit 10.4

Form of Long-Term Warrant

 

VOID AFTER 5:00 P.M.,
NEW YORK CITY

TIME, ON THE
EXPIRATION DATE (AS DEFINED BELOW)

 

 

THIS WARRANT
AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.
THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

 

Right to
Purchase
               Shares
of

Series A Convertible Preferred Stock,
      par value $.001 per share

 

Date:  May 12, 2003

 

CAMBRIDGE HEART, INC.

STOCK PURCHASE WARRANT

 

THIS CERTIFIES THAT, for value received,
                     ,
or its registered assigns, is entitled to purchase from Cambridge Heart, Inc.,
a corporation organized under the laws of the State of Delaware (the “Company”),
at any time or from time to time during the period specified in Section 2
hereof
                 fully
paid and nonassessable shares of the Company’s Series A Convertible Preferred
Stock, par value $.001 per share (the “Series A Preferred Stock”), at an exercise
price per share (the “Exercise Price”) equal to $5.525.  The number of shares of Series A Preferred
Stock purchasable hereunder shall be defined herein as “Warrant Shares.”  The Exercise Price is subject to adjustment
as provided in Section 4 hereof. 
The term “Warrants” means this Warrant and the other warrants of the
Company issued pursuant to that certain Securities Purchase Agreement, dated as
of May 12, 2003, by and among the Company and the other signatories
thereto  (the “Securities Purchase Agreement”).

 

This Warrant is subject to the following terms, provisions and
conditions:

 

1.             Manner
of Exercise; Issuance of Certificates; Payment for Shares.  Subject to the provisions hereof, including,
without limitation, the limitations contained in Section 7 hereof, this Warrant
may be exercised by the holder hereof, in whole or in part, by the surrender of
this Warrant, together with a completed exercise agreement in the form attached
hereto (the

 

 

“Exercise Agreement”), to the Company during normal business
hours on any business day at the Company’s principal executive offices (or such
other office or agency of the Company as it may designate by written notice to
the holder hereof), and upon (i) payment to the Company in cash, by certified
or official bank check or by wire transfer for the account of the Company, of
the Exercise Price for the Warrant Shares specified in the Exercise Agreement
or (ii) if the holder is effectuating a Cashless Exercise (as defined in
Section 11(c) hereof) pursuant to Section 11(c) hereof, delivery to the Company
of a written notice of an election to effect a Cashless Exercise for the
Warrant Shares specified in the Exercise Agreement.  The Warrant Shares so purchased shall be deemed to be issued to
the holder hereof or such holder’s designee, as the record owner of such
shares, as of the close of business on the date on which this Warrant shall
have been surrendered, the completed Exercise Agreement shall have been delivered,
and payment shall have been made for such shares as set forth above or, if such
date is not a business date, on the next succeeding business date.  The Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise
Agreement, shall be delivered to the holder hereof within a reasonable time,
not exceeding three (3) business days, after this Warrant shall have been so
exercised (the “Delivery Period”).  The Company shall deliver to the holder
physical certificates representing the Warrant Shares so purchased.  Any certificates so delivered shall be in
such denominations as may be reasonably requested by the holder hereof, shall
be registered in the name of such holder or such other name as shall be
designated by such holder and, following the date on which the Warrant Shares
may be sold by the holder pursuant to Rule 144(k) promulgated under the
Securities Act (or a successor rule), shall not bear any restrictive
legend.  If this Warrant shall have been
exercised only in part, then the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the holder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have
been exercised.

 

2.             Period
of Exercise; Vesting.  Subject to
the following sentence of this Section 2, this Warrant is immediately
exercisable, at any time or from time to time on or after May 12, 2003 (the “Issue Date”) and before 5:00 p.m., New York
City time, on January 1, 2009, subject to adjustment (as adjusted, the “Expiration Date”) as provided in Section 2(d) of the
Registration Rights Agreement, dated as of May 12, 2003, by and among the
Company and the other signatories thereto (the “Registration
Rights Agreement”)  (such
period being the “Exercise Period”).  This Warrant shall cumulatively vest and be
exercisable during the Exercise Period with respect to the number of Warrant
Shares that equals thirty (30) [seventy-five (75) for Tail Wind] percent of the
cumulative number of shares of Series A Preferred Stock that have been
purchased by the original holder hereof pursuant to the Securities Purchase
Agreement and upon exercise of the Short-Term Warrants issued pursuant to the
Securities Purchase Agreement.

 

3.             Certain
Agreements of the Company.  The
Company hereby covenants and agrees as follows:

 

2

 

 

(a)           Shares to be Fully Paid.  All Warrant Shares, upon issuance in
accordance with the terms of this Warrant, and the shares of Common Stock
issuable upon conversion of the Warrant Shares, will be validly issued, fully
paid and nonassessable and free from all liens, claims and encumbrances.

 

(b)           Reservation of Shares.  During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Series A
Preferred Stock to provide for the exercise in full of the shares of Series A
Preferred Stock listed on the face of this Warrant and for the purpose of
issuance upon conversion of the Warrant Shares, a sufficient number of shares
of Common Stock to provide for conversion of all the Warrant Shares.

 

(c)           Certain Actions Prohibited.  The Company will not, by amendment of its
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the holder
of this Warrant in order to protect the economic benefit inuring to the holder
hereof and the exercise privilege of the holder of this Warrant against
dilution or other impairment, consistent with the tenor and purpose of this
Warrant.  Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any shares of Series A Preferred Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Series A
Preferred Stock upon the exercise of this Warrant.

 

(d)           Successors and Assigns.  This Warrant will be binding upon any entity
succeeding to the Company by merger, consolidation, or acquisition of all or
substantially all of the Company’s assets.

 

(e)           Blue Sky Laws.  The Company shall, on or before the date of
issuance of any Warrant Shares, take such actions as the Company shall
reasonably determine are necessary to qualify the Warrant Shares for, or obtain
exemption for the Warrant Shares for, sale to the holder of this Warrant upon
the exercise hereof under applicable securities or “blue sky” laws of the
states of the United States, and shall provide evidence of any such action so
taken to the holder of this Warrant prior to such date; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (i) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e), (ii) subject itself
to general taxation in any such jurisdiction or (iii) file a general consent to
service of process in any such jurisdiction.

 

4.             Adjustment
Provisions.  During the Exercise
Period, the Exercise Price hereunder shall be subject to adjustment from time
to time as provided in this Section 4.

 

3

 

(a)           Subdivision or Combination of
Series A Preferred Stock.  If the
Company, at any time during the Exercise Period, subdivides (by any stock
split, stock dividend, recapitalization, reorganization, reclassification or
otherwise) its shares of Series A Preferred Stock into a greater number
of shares, then, after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced.  If the
Company, at any time during the Exercise Period, combines (by reverse stock
split, recapitalization, reorganization, reclassification or otherwise) its
shares of Series A Preferred Stock into a smaller number of shares,
then, after the date of record for effecting such combination, the Exercise
Price in effect immediately prior to such combination will be proportionately
increased.

 

(b)           Adjustment in Number of Shares.  Upon each adjustment of the Exercise Price
pursuant to the provisions of Section 4(a), the number of shares of Common
Stock issuable upon exercise of this Warrant at each such Exercise Price shall
be adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon exercise of this Warrant at such Exercise Price immediately prior
to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.

 

(c)           Consolidation, Merger or Sale.  In case of any consolidation of the Company
with, or merger of the Company into, any other corporation, or in case of any
sale or conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the Company at
any time during the Exercise Period, then as a condition of such consolidation,
merger or sale or conveyance, adequate provision will be made whereby the
holder hereof will have the right to acquire and receive upon exercise of this
Warrant in lieu of the shares of Series A Preferred Stock immediately
theretofore acquirable upon the exercise of this Warrant, such shares of stock,
securities, cash or assets as may be issued or payable with respect to or in
exchange for the number of shares of Series A Preferred Stock immediately
theretofore acquirable and receivable upon exercise of this Warrant had such
consolidation, merger or sale or conveyance not taken place.  In any such case, the Company will make
appropriate provision to insure that the provisions of this Section 4 hereof
will thereafter be applicable as nearly as may be in relation to any shares of
stock or securities thereafter deliverable upon the exercise of this Warrant.  The Company will not effect any
consolidation, merger or sale or conveyance unless prior to the consummation
thereof, the successor corporation (if other than the Company) assumes by
written instrument the obligations under this Warrant and the obligations to
deliver to the holder hereof such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the holder may be entitled to
acquire.  Notwithstanding the foregoing,
in the event of any consolidation of the Company with, or merger of the Company
into, any other corporation, or the sale or conveyance of all or substantially
all of the assets of the Company, at any time during the Exercise Period, where
the consideration consists solely of cash, the holder hereof shall receive, in
connection with such transaction, cash consideration equal to the fair market
value of this Warrant as determined in accordance with customary valuation
methodology used in the investment banking industry.

 

4

 

(d)           Distribution of Assets.  In case the Company shall declare or make
any distribution of its assets (or rights to acquire its assets) to holders of
Series A Preferred Stock as a partial liquidating dividend, stock repurchase by
way of return of capital or otherwise (including any dividend or distribution
to the Company’s stockholders of cash or shares (or rights to acquire shares)
of capital stock of a subsidiary) (a “Distribution”),
at any time during the Exercise Period, then the holder hereof shall be
entitled upon exercise of this Warrant for the purchase of any or all of the
shares of Series A Preferred Stock subject hereto, to receive the amount of
such assets (or rights) which would have been payable to the holder had such
holder been the holder of such shares of Series A Preferred Stock on the record
date for the determination of shareholders entitled to such Distribution.  If the Company distributes rights, warrants,
options or any other form of convertible securities and the right to exercise
or convert such securities would expire in accordance with their terms prior to
the expiration of the Exercise Period, then the terms of such securities shall
provide that such exercise or convertibility right shall remain in effect until
thirty (30) days after the date the holder hereof receives such securities
pursuant to the exercise hereof.

 

(e)           Notice of Adjustment.  Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder hereof, which notice shall
state the Exercise Price resulting from such adjustment and the increase or
decrease in the number of Warrant Shares purchasable at such price upon
exercise, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. 
Such calculation shall be certified by the chief financial officer of
the Company.

 

(f)            Minimum Adjustment of Exercise
Price.  No adjustment of the
Exercise Price shall be made in an amount of less than $.01, but any such
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than $.01.

 

(g)           No Fractional Shares.  No fractional shares of Series A Preferred
Stock are to be issued upon the exercise of this Warrant, but the Company shall
pay a cash adjustment in respect of any fractional share which would otherwise
be issuable in an amount equal (i) the same fraction of the Market Price of a
share of Common Stock on the date of such exercise, multiplied by (ii) an
amount equal to (A) $4.42 divided by (B) the Series A Conversion Price (as
defined in the Certificate of Designations of the Preferred Stock of Cambridge
Heart, Inc. to be Designated Series A Convertible Preferred Stock) then in
effect.

 

(h)           Other Notices.  In case at any time:

 

(i)            the Company shall declare any dividend upon the Series A
Preferred Stock payable in shares of stock of any class or make any other
distribution (other than dividends or distributions payable in cash out of
retained earnings consistent with the Company’s past practices with respect to
declaring dividends and making distributions) to the holders of the Series A
Preferred Stock;

 

5

 

(ii)           the Company shall offer for subscription pro rata to the
holders of the Series A Preferred Stock any additional shares of stock of any
class or other rights;

 

(iii)          there shall be any capital reorganization of the Company,
or reclassification of the Series A Preferred Stock, or consolidation or merger
of the Company with or into, or sale of all or substantially all of its assets
to, another corporation or entity; or

 

(iv)          there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;

 

then, in each such case, the
Company shall give to the holder of this Warrant (A) notice of the date or
estimated date on which the books of the Company shall close or a record shall
be taken for determining the holders of Series A Preferred Stock entitled to
receive any such dividend, distribution, or subscription rights or for
determining the holders of Series A Preferred Stock entitled to vote in respect
of any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up and (B) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable estimate thereof by the Company) when the same shall take
place.  Such notice shall also specify
the date on which the holders of Series A Preferred Stock shall be entitled to
receive such dividend, distribution, or subscription rights or to exchange
their Series A Preferred Stock for stock or other securities or property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up, as the case may be.  Such notice shall be given at least fifteen
(15) days prior to the record date or the date on which the Company’s books are
closed in respect thereto.  Failure to
give any such notice or any defect therein shall not affect the validity of the
proceedings referred to in clauses (i), (ii), (iii) and (iv) above.  Notwithstanding the foregoing, the Company
shall publicly disclose the substance of any notice delivered hereunder prior
to delivery of such notice to the holder hereof.

 

(i)            Certain Events.  If, at any time during the Exercise Period,
any event occurs of the type contemplated by the adjustment provisions of this
Section 4 but not expressly provided for by such provisions, the Company will
give notice of such event as provided in Section 4(e) hereof, and the Company’s
Board of Directors will make an appropriate adjustment in the Exercise Price
and the number of shares of Series A Preferred Stock acquirable upon exercise
of this Warrant at each such Exercise Price so that the rights of the holder
shall be neither enhanced nor diminished by such event.

 

(j)            Definition of Market Price.  “Market
Price,” as of any date, means, with respect to the Common Stock, (i)
the average of the last sales prices for the shares of Common Stock as reported
on the Nasdaq SmallCap Market by Bloomberg Financial Markets (“Bloomberg”) for the ten (10) consecutive
Business Days immediately preceding such date, or (ii) if the Nasdaq SmallCap
Market is not the principal trading market for the shares of Common Stock, the
average of the reported last sales prices reported by Bloomberg on the
principal trading market for the Common Stock during the same period, or (iii)
if the foregoing do not 

 

6

 

apply, the last sale price of such security
in the over-the-counter market on the pink sheets or bulletin board for such
security as reported by Bloomberg, or if no sale price is so reported for such
security, the last bid price of such security as reported by Bloomberg, or (iv)
if market value cannot be calculated as of such date on any of the foregoing
bases, the Market Price shall be the average fair market value as reasonably
determined by an investment banking firm selected by the Company and reasonably
acceptable to the holder, with the costs of the appraisal to be borne by the
Company.

 

5.             Issue
Tax.  The issuance of certificates
for Warrant Shares upon the exercise of this Warrant shall be made without
charge to the holder of this Warrant or such shares for any issuance tax or
other costs in respect thereof, provided that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than the holder of
this Warrant.

 

6.             No
Rights or Liabilities as a Stockholder. 
This Warrant shall not entitle the holder hereof to any voting rights or
other rights as a stockholder of the Company. 
No provision of this Warrant, in the absence of affirmative action by
the holder hereof to purchase Warrant Shares, and no mere enumeration herein of
the rights or privileges of the holder hereof, shall give rise to any liability
of such holder for the Exercise Price or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the Company.

 

7.             Transfer,
Exchange, Redemption and Replacement of Warrant.

 

(a)           Restriction on
Transfer.  This Warrant and the
rights granted to the holder hereof may not be transferred, in whole or in
part, except for (a) any sale or transfer to another Purchaser, as defined in
and listed on Schedule I to the Securities Purchase Agreement, or (b) any sale
or transfer by the holder hereof to its “affiliate” (as defined in Rule 144 of
the Securities Act).  Subject to the
foregoing, this Warrant and the rights granted to the holder hereof are
transferable, in whole or in part, upon surrender of this Warrant, together
with a properly executed assignment in the form attached hereto, at the office
or agency of the Company referred to in Section 7(e) below, provided, however, that any transfer or
assignment shall be subject to the conditions set forth in Sections 7(f) and
(g) hereof and to the provisions of Sections 2(f) and 2(g) of the Securities
Purchase Agreement.  Until due presentment
for registration of transfer on the books of the Company, the Company may treat
the registered holder hereof as the owner and holder hereof for all purposes,
and the Company shall not be affected by any notice to the contrary.  Notwithstanding anything to the contrary
contained herein, the registration rights described in Section 8 hereof are
assignable only in accordance with the provisions of the Registration Rights
Agreement.

 

(b)           Warrant Exchangeable for Different
Denominations.  This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for new Warrants of
like tenor of different denominations representing in the aggregate the right
to purchase the number of shares of Series A Preferred Stock which may be
purchased hereunder, each of such new Warrants to represent

 

7

 

the right to purchase such number of shares
(at the Exercise Price therefor) as shall be designated by the holder hereof at
the time of such surrender.

 

(c)           Replacement of Warrant.  Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

 

(d)           Cancellation; Payment of Expenses.  Upon the surrender of this Warrant in
connection with any transfer, exchange, or replacement as provided in this
Section 7, this Warrant shall be promptly canceled by the Company.  The Company shall pay all taxes (other than
securities transfer taxes) and other expenses (other than legal expenses, if
any, incurred by the Holder or transferees) and charges payable in connection
with the preparation, execution, and delivery of Warrants pursuant to this Section
7.  The Company shall indemnify and
reimburse the holder of this Warrant for all losses and damages arising as a
result of or related to any breach of the terms of this Warrant, including
costs and expenses (including legal fees) incurred by such holder in connection
with the enforcement of its rights hereunder.

 

(e)           Warrant Register.  The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.

 

(f)            Transfer or Exchange Without
Registration.  If, at the time of
the surrender of this Warrant in connection with any transfer or exchange of
this Warrant, this Warrant (or, in the case of any exercise, the Warrant Shares
issuable hereunder, or in the case of any conversion of the Warrant Shares, the
shares of Common Stock issuable upon such conversion) shall not be registered
under the Securities Act and under applicable state securities or blue sky
laws, the Company may require, as a condition of allowing such transfer or
exchange, (i) that the holder or transferee of this Warrant, as the case may
be, furnish to the Company a written opinion of counsel (which opinion shall be
in form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such transfer or exchange 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) promulgated under the Securities
Act; provided that no such
opinion, letter, or status as an “accredited investor” shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act; and provided further that no such opinion or
letter shall be required in connection with a transfer to an affiliate of a
holder who agrees to sell or otherwise transfer the Warrant (or, in the case of
any exercise, the

 

8

 

Warrant Shares issuable hereunder) only in
accordance with the provisions of this Section 7(f) and who is an “accredited
investor.”

 

8.             Registration
Rights.  The initial holder of this
Warrant (and certain assignees thereof) is entitled to the benefit of such
registration rights in respect of the shares of Common Stock issuable upon
conversion of the Warrant Shares as are set forth in the Registration Rights
Agreement, including the right to assign such rights to certain assignees, as
set forth therein.

 

9.             Notices.  Any notices required or permitted to be
given under the terms of this Warrant shall be sent by certified or registered
mail (return receipt requested) or delivered personally or by courier or by
confirmed telecopy, and shall be effective five days after being placed in the
mail, if mailed, or upon receipt or refusal of receipt, if delivered personally
or by courier, or by confirmed telecopy, in each case addressed to a party.  The addresses for such communications shall
be:

 

	
   

  	
  If to the
  Company:

  
	
   

  	
   

  
	
   

  	
  Cambridge
  Heart, Inc.

  
	
   

  	
  1 Oak Park
  Drive

  
	
   

  	
  Bedford,
  Massachusetts  01730

  
	
   

  	
  Telephone:  (781) 271-1200

  
	
   

  	
  Facsimile:  (781) 275-8431

  
	
   

  	
  Attn.:  President

  
	
   

  	
   

  
	
   

  	
  with a copy
  simultaneously transmitted by like means to:

  
	
   

  	
   

  
	
   

  	
  Hale and
  Dorr LLP

  
	
   

  	
  60 State
  Street

  
	
   

  	
  Boston,
  Massachusetts  02109

  
	
   

  	
  Telephone:  (617) 526-6000

  
	
   

  	
  Facsimile:  (617)
  526-5000

  
	
   

  	
  Attn:  John
  A. Burgess, Esq.

  

 

If to the holder, at such address as such
holder shall have provided in writing to the Company, or at such other address
as such holder furnishes by notice given in accordance with this Section 9;

 

10.           Governing
Law; Jurisdiction.  This Warrant
shall be governed by and construed in accordance with the laws of the State of
Delaware.  The Company irrevocably
consents to the jurisdiction of the United States federal courts and state
courts located in the State of Delaware in any suit or proceeding based on or
arising under this Warrant and irrevocably agrees that all claims in respect of
such suit or proceeding may be determined in such courts. The Company

 

9

 

irrevocably waives any
objection to the laying of venue and the defense of an inconvenient forum to
the maintenance of such suit or proceeding. The Company further agrees that
service of process upon the Company mailed by certified or registered mail
shall be deemed in every respect effective service of process upon the Company
in any such suit or proceeding.  Nothing
herein shall affect the holder’s right to serve process in any other manner
permitted by law.  The Company agrees
that a final non-appealable judgment in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on such judgment
or in any other lawful manner.

 

11.           Miscellaneous.

 

(a)           Amendments.  This Warrant and any provision hereof may
only be amended by an instrument in writing signed by the Company and the
holder hereof.

 

(b)           Descriptive Headings.  The descriptive headings of the several
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.

 

(c)           Cashless Exercise.  This Warrant may be exercised at any time
during the Exercise Period by presentation and surrender of this Warrant to the
Company at its principal executive offices with a written notice of the
holder’s intention to effect a cashless exercise, including a calculation of
the number of shares of Common Stock to be issued upon such exercise in
accordance with the terms hereof (a “Cashless
Exercise”).  In the event of
a Cashless Exercise, in lieu of paying the Exercise Price in cash, the holder
shall surrender this Warrant for that number of shares of Common Stock
determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the
difference between the then current Market Price of a share of the Common Stock
on the date of exercise and the Exercise Price, and the denominator of which
shall be the then current Market Price per share of Common Stock.

 

(d)           Business Day.  For purposes of this Warrant, the term “Business Day”  means any day, other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by
law, regulation or executive order to close.

 

10

 

IN
WITNESS WHEREOF, the Company has caused this Warrant
to be signed by its duly authorized officer.

 

 

	
   

  	
  CAMBRIDGE HEART,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

11

 

FORM OF EXERCISE
AGREEMENT

 

(To be Executed by
the Holder in order to Exercise the Warrant)

 

To:          Cambridge
Heart, Inc.

1 Oak Park
Drive

Bedford,
Massachusetts  01730

Telephone:  (781) 271-1200

Facsimile:  (781)
275-8431

Attn: 
Chief Executive Officer

 

The undersigned hereby irrevocably exercises the right to purchase                                 shares of the
Series A Preferred Stock of Cambridge Heart, Inc., a corporation organized
under the laws of the State of Delaware (the “Company”), evidenced by the
attached Warrant, and herewith [makes payment of the Exercise Price with
respect to such shares in full][elects to effect a Cashless Exercise (as
defined in Section 11(c) of such Warrant)], with respect to such shares in
full, all in accordance with the conditions and provisions of said Warrant.

 

The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any Series A Preferred Stock obtained on exercise of the Warrant,
except under circumstances that will not result in a violation of the
Securities Act of 1933, as amended, or any state securities laws.

 

The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder
and delivered to the undersigned at the address set forth below:

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature of Holder

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name of Holder (Print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

12

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant, with
respect to the number of shares of Series A Preferred Stock covered thereby set
forth hereinbelow, to:

 

	
  Name of Assignee

  	
   

  	
  Address

  	
   

  	
  No. of
  Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

, and hereby irrevocably constitutes and
appoints
                                                              as
agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.

 

 

	
  Dated:
                                      ,
           

  	
   

  
	
   

  	
   

  
	
  In the
  presence of

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title of Signing Officer or Agent (if any):

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Note:

  	
  The above signature should correspond

  exactly with the name on the face of the

  within Warrant.

  
						

 

13Exhibit 10.5

 

VOID AFTER 5:00 P.M.,
NEW YORK CITY

TIME, ON THE
EXPIRATION DATE (AS DEFINED BELOW)

 

THIS WARRANT
AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION.
THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.

 

Right to
Purchase 67,873 Shares of

Series A Convertible Preferred Stock,
      par value $.001 per share

 

Date:  May 12, 2003

 

CAMBRIDGE HEART, INC.

STOCK PURCHASE
WARRANT

 

THIS CERTIFIES THAT, for value
received, Medtronic, Inc., or its registered assigns, is entitled to purchase
from Cambridge Heart, Inc., a corporation organized under the laws of the State
of Delaware (the “Company”), at any time or from time to time
during the period specified in Section 2 hereof 67,873 fully paid and
nonassessable shares of the Company’s Series A Convertible Preferred Stock, par
value $.001 per share (the “Series A Preferred Stock”), at an exercise
price per share (the “Exercise Price”) equal to $4.42.  The number of shares of Series A Preferred
Stock purchasable hereunder shall be defined herein as “Warrant Shares.”  The Exercise Price is subject to adjustment
as provided in Section 4 hereof. 
The term “Warrants” means this Warrant and the other warrants of the
Company issued pursuant to that certain Securities Purchase Agreement, dated as
of May 12, 2003, by and among the Company and the other signatories
thereto  (the “Securities Purchase Agreement”).

 

This Warrant is subject to the
following terms, provisions and conditions:

 

1.             Manner of Exercise; Issuance of
Certificates; Payment for Shares. 
Subject to the provisions hereof, including, without limitation, the
limitations contained in Section 7 hereof, this Warrant may be exercised by the
holder hereof, in whole or in part, by the surrender of this Warrant, together
with a completed exercise agreement in the form attached hereto (the “Exercise Agreement”), to the Company during
normal business hours on any business day at the Company’s principal executive
offices (or such other office or agency of the Company as it

 

 

may designate
by written notice to the holder hereof), and upon (i) payment to the Company in
cash, by certified or official bank check or by wire transfer for the account
of the Company, of the Exercise Price for the Warrant Shares specified in the
Exercise Agreement or (ii) if the holder is effectuating a Cashless Exercise
(as defined in Section 11(c) hereof) pursuant to Section 11(c) hereof, delivery
to the Company of a written notice of an election to effect a Cashless Exercise
for the Warrant Shares specified in the Exercise Agreement.  The Warrant Shares so purchased shall be deemed
to be issued to the holder hereof or such holder’s designee, as the record
owner of such shares, as of the close of business on the date on which this
Warrant shall have been surrendered, the completed Exercise Agreement shall
have been delivered, and payment shall have been made for such shares as set
forth above or, if such date is not a business date, on the next succeeding
business date.  The Warrant Shares so
purchased, representing the aggregate number of shares specified in the
Exercise Agreement, shall be delivered to the holder hereof within a reasonable
time, not exceeding three (3) business days, after this Warrant shall have been
so exercised (the “Delivery Period”).  The Company shall deliver to the holder
physical certificates representing the Warrant Shares so purchased.  Any certificates so delivered shall be in
such denominations as may be reasonably requested by the holder hereof, shall
be registered in the name of such holder or such other name as shall be
designated by such holder and, following the date on which the Warrant Shares
may be sold by the holder pursuant to Rule 144(k) promulgated under the
Securities Act (or a successor rule), shall not bear any restrictive
legend.  If this Warrant shall have been
exercised only in part, then the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the holder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have
been exercised.

 

2.             Period of Exercise.  This Warrant is immediately exercisable, at
any time or from time to time on or after May 12, 2003 (the “Issue Date”) and before 5:00 p.m., New York
City time, on January 1, 2009, subject to adjustment (as adjusted, the “Expiration Date”) as provided in Section 2(d) of the
Registration Rights Agreement, dated as of May 12, 2003, by and among the
Company and the other signatories thereto (the “Registration
Rights Agreement”)  (such
period being the “Exercise Period”).

 

3.             Certain Agreements of the
Company.  The Company hereby
covenants and agrees as follows:

 

(a)           Shares to be Fully Paid.  All Warrant Shares, upon issuance in accordance with the terms of
this Warrant, and the shares of Common Stock issuable upon conversion of the
Warrant Shares, will be validly issued, fully paid and nonassessable and free
from all liens, claims and encumbrances.

 

(b)           Reservation of Shares.  During the Exercise Period, the Company shall at all times have
authorized, and reserved for the purpose of issuance upon exercise of this
Warrant, a sufficient number of shares of Series A Preferred Stock to provide
for the exercise in full of the shares of Series A Preferred Stock listed on
the face of this Warrant and for the purpose of 

 

2

 

issuance upon conversion of the Warrant Shares,
a sufficient number of shares of Common Stock to provide for conversion of all
the Warrant Shares.

 

(c)           Certain Actions Prohibited.  The Company will not, by amendment of its
charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the holder
of this Warrant in order to protect the economic benefit inuring to the holder
hereof and the exercise privilege of the holder of this Warrant against
dilution or other impairment, consistent with the tenor and purpose of this
Warrant.  Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any shares of Series A Preferred Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Series A Preferred
Stock upon the exercise of this Warrant.

 

(d)           Successors and Assigns.  This Warrant will be binding upon any entity succeeding to the
Company by merger, consolidation, or acquisition of all or substantially all of
the Company’s assets.

 

(e)           Blue Sky Laws. 
The Company shall, on or before the date of issuance of any Warrant
Shares, take such actions as the Company shall reasonably determine are
necessary to qualify the Warrant Shares for, or obtain exemption for the
Warrant Shares for, sale to the holder of this Warrant upon the exercise hereof
under applicable securities or “blue sky” laws of the states of the United
States, and shall provide evidence of any such action so taken to the holder of
this Warrant prior to such date; provided, however, that the Company shall not
be required in connection therewith or as a condition thereto to (i) qualify to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(e), (ii) subject itself to general taxation in
any such jurisdiction or (iii) file a general consent to service of process in
any such jurisdiction.

 

4.             Adjustment Provisions.  During the Exercise Period, the Exercise
Price hereunder shall be subject to adjustment from time to time as provided in
this Section 4.

 

(a)           Subdivision or Combination of Series A Preferred Stock.  If the Company, at any time during the
Exercise Period, subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) its shares of Series
A Preferred Stock into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced.  If the Company, at any time during the
Exercise Period, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Series A
Preferred Stock into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price in effect immediately
prior to such combination will be proportionately increased.

 

3

 

(b)           Adjustment in Number of Shares.  Upon each adjustment of the Exercise Price
pursuant to the provisions of Section 4(a), the number of shares of Common
Stock issuable upon exercise of this Warrant at each such Exercise Price shall
be adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon exercise of this Warrant at such Exercise Price immediately prior
to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.

 

(c)           Consolidation, Merger or Sale.  In case of any consolidation of the Company
with, or merger of the Company into, any other corporation, or in case of any
sale or conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the Company at
any time during the Exercise Period, then as a condition of such consolidation,
merger or sale or conveyance, adequate provision will be made whereby the
holder hereof will have the right to acquire and receive upon exercise of this
Warrant in lieu of the shares of Series A Preferred Stock immediately
theretofore acquirable upon the exercise of this Warrant, such shares of stock,
securities, cash or assets as may be issued or payable with respect to or in
exchange for the number of shares of Series A Preferred Stock immediately
theretofore acquirable and receivable upon exercise of this Warrant had such
consolidation, merger or sale or conveyance not taken place.  In any such case, the Company will make
appropriate provision to insure that the provisions of this Section 4 hereof
will thereafter be applicable as nearly as may be in relation to any shares of
stock or securities thereafter deliverable upon the exercise of this
Warrant.  The Company will not effect
any consolidation, merger or sale or conveyance unless prior to the
consummation thereof, the successor corporation (if other than the Company)
assumes by written instrument the obligations under this Warrant and the
obligations to deliver to the holder hereof such shares of stock, securities or
assets as, in accordance with the foregoing provisions, the holder may be
entitled to acquire.  Notwithstanding
the foregoing, in the event of any consolidation of the Company with, or merger
of the Company into, any other corporation, or the sale or conveyance of all or
substantially all of the assets of the Company, at any time during the Exercise
Period, where the consideration consists solely of cash, the holder hereof
shall receive, in connection with such transaction, cash consideration equal to
the fair market value of this Warrant as determined in accordance with
customary valuation methodology used in the investment banking industry.

 

(d)           Distribution of Assets.  In case the Company shall declare or make any distribution of its
assets (or rights to acquire its assets) to holders of Series A Preferred Stock
as a partial liquidating dividend, stock repurchase by way of return of capital
or otherwise (including any dividend or distribution to the Company’s
stockholders of cash or shares (or rights to acquire shares) of capital stock
of a subsidiary) (a “Distribution”),
at any time during the Exercise Period, then the holder hereof shall be
entitled upon exercise of this Warrant for the purchase of any or all of the
shares of Series A Preferred Stock subject hereto, to receive the amount of
such assets (or rights) which would have been payable to the holder had such
holder been the holder of such shares of Series A Preferred Stock on the record
date for the determination of shareholders entitled to such Distribution.  If the Company distributes rights, warrants,
options or any other form of convertible securities and the right to exercise
or convert such securities would

 

4

 

expire in accordance with their terms prior
to the expiration of the Exercise Period, then the terms of such securities
shall provide that such exercise or convertibility right shall remain in effect
until thirty (30) days after the date the holder hereof receives such
securities pursuant to the exercise hereof.

 

(e)           Notice of Adjustment.  Upon the occurrence of any event which requires any adjustment of
the Exercise Price, then, and in each such case, the Company shall give notice
thereof to the holder hereof, which notice shall state the Exercise Price
resulting from such adjustment and the increase or decrease in the number of
Warrant Shares purchasable at such price upon exercise, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.  Such calculation
shall be certified by the chief financial officer of the Company.

 

(f)            Minimum Adjustment of Exercise Price.  No adjustment of the Exercise Price shall be
made in an amount of less than $.01, but any such lesser adjustment shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments so carried forward,
shall amount to not less than $.01.

 

(g)           No Fractional Shares.  No fractional shares of Series A Preferred Stock are to be issued
upon the exercise of this Warrant, but the Company shall pay a cash adjustment
in respect of any fractional share which would otherwise be issuable in an
amount equal (i) the same fraction of the Market Price of a share of Common
Stock on the date of such exercise, multiplied by (ii) an amount equal to (A)
$4.42 divided by (B) the Series A Conversion Price (as defined in the
Certificate of Designations of the Preferred Stock of Cambridge Heart, Inc. to
be Designated Series A Convertible Preferred Stock) then in effect.

 

(h)           Other Notices. 
In case at any time:

 

(i)            the Company shall declare any dividend upon the Series A
Preferred Stock payable in shares of stock of any class or make any other
distribution (other than dividends or distributions payable in cash out of
retained earnings consistent with the Company’s past practices with respect to
declaring dividends and making distributions) to the holders of the Series A
Preferred Stock;

 

(ii)           the Company shall offer for subscription pro rata to the
holders of the Series A Preferred Stock any additional shares of stock of any
class or other rights;

 

(iii)          there shall be any capital reorganization of the Company,
or reclassification of the Series A Preferred Stock, or consolidation or merger
of the Company with or into, or sale of all or substantially all of its assets
to, another corporation or entity; or

 

(iv)          there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;

 

5

 

then, in each such case, the
Company shall give to the holder of this Warrant (A) notice of the date or
estimated date on which the books of the Company shall close or a record shall
be taken for determining the holders of Series A Preferred Stock entitled to
receive any such dividend, distribution, or subscription rights or for
determining the holders of Series A Preferred Stock entitled to vote in respect
of any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up and (B) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable estimate thereof by the Company) when the same shall take
place.  Such notice shall also specify
the date on which the holders of Series A Preferred Stock shall be entitled to
receive such dividend, distribution, or subscription rights or to exchange their
Series A Preferred Stock for stock or other securities or property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding-up, as the case may be.  Such notice shall be given at least fifteen
(15) days prior to the record date or the date on which the Company’s books are
closed in respect thereto.  Failure to
give any such notice or any defect therein shall not affect the validity of the
proceedings referred to in clauses (i), (ii), (iii) and (iv) above.  Notwithstanding the foregoing, the Company
shall publicly disclose the substance of any notice delivered hereunder prior
to delivery of such notice to the holder hereof.

 

(i)            Certain Events. 
If, at any time during the Exercise Period, any event occurs of the type
contemplated by the adjustment provisions of this Section 4 but not expressly
provided for by such provisions, the Company will give notice of such event as
provided in Section 4(e) hereof, and the Company’s Board of Directors will make
an appropriate adjustment in the Exercise Price and the number of shares of
Series A Preferred Stock acquirable upon exercise of this Warrant at each such
Exercise Price so that the rights of the holder shall be neither enhanced nor
diminished by such event.

 

(j)            Definition of Market Price.  “Market
Price,” as of any date, means, with respect to the Common Stock, (i)
the average of the last sales prices for the shares of Common Stock as reported
on the Nasdaq SmallCap Market by Bloomberg Financial Markets (“Bloomberg”) for the ten (10) consecutive
Business Days immediately preceding such date, or (ii) if the Nasdaq SmallCap
Market is not the principal trading market for the shares of Common Stock, the
average of the reported last sales prices reported by Bloomberg on the
principal trading market for the Common Stock during the same period, or (iii)
if the foregoing do not apply, the last sale price of such security in the
over-the-counter market on the pink sheets or bulletin board for such security
as reported by Bloomberg, or if no sale price is so reported for such security,
the last bid price of such security as reported by Bloomberg, or (iv) if market
value cannot be calculated as of such date on any of the foregoing bases, the
Market Price shall be the average fair market value as reasonably determined by
an investment banking firm selected by the Company and reasonably acceptable to
the holder, with the costs of the appraisal to be borne by the Company.

 

5.             Issue Tax.  The issuance of certificates for Warrant
Shares upon the exercise of this Warrant shall be made without charge to the
holder of this Warrant or such shares for any

 

6

 

issuance tax
or other costs in respect thereof, provided that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
the holder of this Warrant.

 

6.             No Rights or Liabilities as a
Stockholder.  This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company.  No provision of this
Warrant, in the absence of affirmative action by the holder hereof to purchase
Warrant Shares, and no mere enumeration herein of the rights or privileges of
the holder hereof, shall give rise to any liability of such holder for the
Exercise Price or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

 

7.             Transfer,
Exchange, Redemption and Replacement of Warrant.

 

(a)           Restriction on Transfer.  This Warrant and the rights granted to the
holder hereof may not be transferred, in whole or in part, except for (a) any
sale or transfer to another Purchaser, as defined in and listed on Schedule I
to the Securities Purchase Agreement, or (b) any sale or transfer by the holder
hereof to its “affiliate” (as defined in Rule 144 of the Securities Act).  Subject to the foregoing, this Warrant and
the rights granted to the holder hereof are transferable, in whole or in part,
upon surrender of this Warrant, together with a properly executed assignment in
the form attached hereto, at the office or agency of the Company referred to in
Section 7(e) below, provided, however,
that any transfer or assignment shall be subject to the conditions set forth in
Sections 7(f) and (g) hereof and to the provisions of Sections 2(f) and 2(g) of
the Securities Purchase Agreement. 
Until due presentment for registration of transfer on the books of the
Company, the Company may treat the registered holder hereof as the owner and
holder hereof for all purposes, and the Company shall not be affected by any
notice to the contrary.  Notwithstanding
anything to the contrary contained herein, the registration rights described in
Section 8 hereof are assignable only in accordance with the provisions of the
Registration Rights Agreement.

 

(b)           Warrant Exchangeable for Different Denominations.  This Warrant is exchangeable, upon the
surrender hereof by the holder hereof at the office or agency of the Company referred
to in Section 7(e) below, for new Warrants of like tenor of different
denominations representing in the aggregate the right to purchase the number of
shares of Series A Preferred Stock which may be purchased hereunder, each of
such new Warrants to represent the right to purchase such number of shares (at
the Exercise Price therefor) as shall be designated by the holder hereof at the
time of such surrender.

 

(c)           Replacement of Warrant.  Upon receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction, or mutilation of this Warrant and, in the case
of any such loss, theft, or destruction, upon delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company, or, in the
case of any such mutilation, upon surrender and cancellation of this Warrant,
the Company, at its expense, will execute and deliver, in lieu thereof, a new
Warrant of like tenor.

 

7

 

(d)           Cancellation; Payment of Expenses.  Upon the surrender of this Warrant in
connection with any transfer, exchange, or replacement as provided in this
Section 7, this Warrant shall be promptly canceled by the Company.  The Company shall pay all taxes (other than
securities transfer taxes) and other expenses (other than legal expenses, if
any, incurred by the Holder or transferees) and charges payable in connection
with the preparation, execution, and delivery of Warrants pursuant to this
Section 7.  The Company shall indemnify
and reimburse the holder of this Warrant for all losses and damages arising as
a result of or related to any breach of the terms of this Warrant, including
costs and expenses (including legal fees) incurred by such holder in connection
with the enforcement of its rights hereunder.

 

(e)           Warrant Register. 
The Company shall maintain, at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to the
holder hereof), a register for this Warrant, in which the Company shall record
the name and address of the person in whose name this Warrant has been issued,
as well as the name and address of each transferee and each prior owner of this
Warrant.

 

(f)            Transfer or Exchange Without Registration.  If, at the time of the surrender of this Warrant
in connection with any transfer or exchange of this Warrant, this Warrant (or,
in the case of any exercise, the Warrant Shares issuable hereunder, or in the
case of any conversion of the Warrant Shares, the shares of Common Stock
issuable upon such conversion) shall not be registered under the Securities Act
and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such transfer or exchange, (i) that the
holder or transferee of this Warrant, as the case may be, furnish to the
Company a written opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions) to the
effect that such transfer or exchange 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) promulgated under the Securities Act; provided that no such opinion, letter, or
status as an “accredited investor” shall be required in connection with a
transfer pursuant to Rule 144 under the Securities Act; and provided further that no such opinion or
letter shall be required in connection with a transfer to an affiliate of a
holder who agrees to sell or otherwise transfer the Warrant (or, in the case of
any exercise, the Warrant Shares issuable hereunder) only in accordance with
the provisions of this Section 7(f) and who is an “accredited investor.”

 

8.             Registration Rights.  The initial holder of this Warrant (and
certain assignees thereof) is entitled to the benefit of such registration
rights in respect of the shares of Common Stock issuable upon conversion of the
Warrant Shares as are set forth in the Registration Rights Agreement, including
the right to assign such rights to certain assignees, as set forth therein.

 

9.             Notices.  Any notices required or permitted to be
given under the terms of this Warrant shall be sent by certified or registered
mail (return receipt requested) or delivered personally or by courier or by
confirmed telecopy, and shall be effective five days after being

 

8

 

placed in the
mail, if mailed, or upon receipt or refusal of receipt, if delivered personally
or by courier, or by confirmed telecopy, in each case addressed to a
party.  The addresses for such
communications shall be:

 

	
   

  	
  If to the
  Company:

  
	
   

  	
   

  
	
   

  	
  Cambridge
  Heart, Inc.

  
	
   

  	
  1 Oak Park
  Drive

  
	
   

  	
  Bedford,
  Massachusetts  01730

  
	
   

  	
  Telephone:  (781) 271-1200

  
	
   

  	
  Facsimile:  (781) 275-8431

  
	
   

  	
  Attn.:  President

  
	
   

  	
   

  
	
   

  	
  with a copy
  simultaneously transmitted by like means to:

  
	
   

  	
   

  
	
   

  	
  Hale and
  Dorr LLP

  
	
   

  	
  60 State
  Street

  
	
   

  	
  Boston,
  Massachusetts  02109

  
	
   

  	
  Telephone:  (617) 526-6000

  
	
   

  	
  Facsimile:  (617)
  526-5000

  
	
   

  	
  Attn:  John
  A. Burgess, Esq.

  
	
   

  	
   

  

 

If to the holder, at such address as such
holder shall have provided in writing to the Company, or at such other address
as such holder furnishes by notice given in accordance with this Section 9;

 

10.           Governing Law; Jurisdiction.  This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware.  The Company irrevocably consents to the
jurisdiction of the United States federal courts and state courts located in
the State of Delaware in any suit or proceeding based on or arising under this
Warrant and irrevocably agrees that all claims in respect of such suit or
proceeding may be determined in such courts. The Company irrevocably waives any
objection to the laying of venue and the defense of an inconvenient forum to
the maintenance of such suit or proceeding. The Company further agrees that
service of process upon the Company mailed by certified or registered mail
shall be deemed in every respect effective service of process upon the Company
in any such suit or proceeding.  Nothing
herein shall affect the holder’s right to serve process in any other manner
permitted by law.  The Company agrees
that a final non-appealable judgment in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on such judgment
or in any other lawful manner.

 

9

 

11.           Miscellaneous.

 

(a)           Amendments. 
This Warrant and any provision hereof may only be amended by an
instrument in writing signed by the Company and the holder hereof.

 

(b)           Descriptive Headings.  The descriptive headings of the several Sections of this Warrant
are inserted for purposes of reference only, and shall not affect the meaning
or construction of any of the provisions hereof.

 

(c)           Cashless Exercise. 
This Warrant may be exercised at any time during the Exercise Period by
presentation and surrender of this Warrant to the Company at its principal
executive offices with a written notice of the holder’s intention to effect a
cashless exercise, including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms hereof (a “Cashless Exercise”).  In the event of a Cashless Exercise, in lieu
of paying the Exercise Price in cash, the holder shall surrender this Warrant
for that number of shares of Common Stock determined by multiplying the number
of Warrant Shares to which it would otherwise be entitled by a fraction, the
numerator of which shall be the difference between the then current Market
Price of a share of the Common Stock on the date of exercise and the Exercise
Price, and the denominator of which shall be the then current Market Price per
share of Common Stock.

 

(d)           Business Day. 
For purposes of this Warrant, the term “Business Day”  means
any day, other than a Saturday or Sunday or a day on which banking institutions
in the State of New York are authorized or obligated by law, regulation or
executive order to close.

 

10

 

IN
WITNESS WHEREOF, the Company has caused this Warrant
to be signed by its duly authorized officer.

 

 

	
   

  	
  CAMBRIDGE HEART,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David A. Chazanovitz

  
	
   

  	
   

  	
  Name:

  	
   David A. Chazanovitz

  
	
   

  	
   

  	
  Title:

  	
   President and Chief Executive
  Officer

  
					

 

11

 

FORM OF EXERCISE
AGREEMENT

 

(To be Executed by
the Holder in order to Exercise the Warrant)

 

To:                              Cambridge Heart, Inc.

1 Oak Park Drive

Bedford, Massachusetts  01730

Telephone: 
(781) 271-1200

Facsimile:  (781) 275-8431

Attn:  Chief Executive Officer

 

The undersigned hereby
irrevocably exercises the right to purchase
                       shares
of the Series A Preferred Stock of Cambridge Heart, Inc., a corporation
organized under the laws of the State of Delaware (the “Company”), evidenced by the
attached Warrant, and herewith [makes payment of the Exercise Price with
respect to such shares in full][elects to effect a Cashless Exercise (as
defined in Section 11(c) of such Warrant)], with respect to such shares in
full, all in accordance with the conditions and provisions of said Warrant.

 

The undersigned agrees not to
offer, sell, transfer or otherwise dispose of any Series A Preferred Stock
obtained on exercise of the Warrant, except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws.

 

The undersigned requests that a
Warrant representing any unexercised portion hereof be issued, pursuant to the
Warrant, in the name of the Holder and delivered to the undersigned at the
address set forth below:

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  Signature of Holder

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name of Holder (Print)

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

12

 

FORM OF ASSIGNMENT

 

FOR VALUE
RECEIVED, the undersigned hereby sells, assigns, and transfers all the rights
of the undersigned under the within Warrant, with respect to the number of
shares of Series A Preferred Stock covered thereby set forth hereinbelow, to:

 

	
  Name of Assignee

  	
   

  	
  Address

  	
   

  	
  No. of
  Shares

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

, and hereby irrevocably constitutes and
appoints
                                                                      as
agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.

 

 

	
  Dated:
                                      ,           

  	
   

  
	
   

  	
   

  
	
  In the
  presence of

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title of Signing Officer or Agent (if any):

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Note:

  	
  The above signature should correspond

  exactly with the name on the face of the

  within Warrant.

  
							

 

13

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