Document:

EXHIBIT
10.4

 

VOTING
AGREEMENT

 

This Voting Agreement (“Agreement”) is
entered into as of April 29, 2003, by and among
                                           
(“Stockholder”)
and certain of the investors set forth on Schedule A (the “Investors”) to that
certain Common Stock and Warrant Purchase Agreement of even date herewith (the
“Purchase Agreement”).

 

Recitals

 

A.                                    Stockholder
is a holder of record and the “beneficial owner” (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of
certain shares of common stock of Rigel Pharmaceuticals, Inc., a Delaware
corporation (the “Company”).

 

B.                                    The
Company is entering into the Purchase Agreement with the Investors that
provides (subject to the conditions set forth therein) for the sale by the
Company and the purchase by the Investors of (i) an aggregate of 71,874,999
shares (the “Shares”)
of the Company’s common stock, par value $0.001 per share (the “Company Common Stock”),
and (ii) Warrants (as defined in the Purchase Agreement).

 

C.                                    In
order to induce the Investors to enter into the Purchase Agreement, Stockholder
is entering into this Agreement.

 

Agreement

 

The parties to
this Agreement, intending to be legally bound, agree as follows:

 

SECTION 1.                            Certain
Definitions

 

For purposes of
this Agreement:

 

(a)                                  The
term “Closing Date”
shall have the meaning assigned to it in the Purchase Agreement.

 

(b)                                  The
term “Offering”
shall have the meaning assigned to it in the Purchase Agreement.

 

(c)                                  Stockholder
shall be deemed to “Own”
or to have acquired “Ownership” of a security if Stockholder (i) is the record
owner of such security or (ii) is the “beneficial owner” (within the meaning of
Rule 13d-3 under the Exchange Act) of such security.

 

(d)                                  “Person” shall mean any
(i) individual, (ii) corporation, limited liability company, partnership or
other entity or (iii) governmental authority.

 

(e)                                  “Subject Securities”
shall mean (i) all securities of the Company (including all shares of Company
Common Stock and all options, warrants and other

 

 

rights to acquire shares of Company Common Stock)
Owned by Stockholder as of the date of this Agreement and (ii) all additional
securities of the Company (including all additional shares of Company Common
Stock and all additional options, warrants and other rights to acquire shares
of Company Common Stock) of which Stockholder acquires Ownership during the
period from the date of this Agreement through the Voting Covenant Expiration
Date.

 

(f)                                    A
Person shall be deemed to have a effected a “Transfer” of a security if such Person
directly or indirectly (i) sells, pledges, encumbers, grants an option with
respect to, transfers or disposes of such security or any interest in such
security to any Person, (ii) enters into an agreement or commitment
contemplating the possible sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein to any Person or (iii) reduces such Person’s beneficial
ownership of, interest in or risk relating to such security.

 

(g)                                 “Voting Covenant Expiration Date”
shall mean the earlier of (i) the date upon which the Purchase Agreement is
validly terminated pursuant to Section 9 thereof or (ii) the Closing Date.

 

SECTION 2.                            Transfer of Subject Securities and Voting
Rights

 

2.1                               Restriction on Transfer of Subject Securities.  Subject to Section 2.3, during the period
from the date of this Agreement through the Voting Covenant Expiration Date,
Stockholder shall not, directly or indirectly, cause or permit any Transfer of
any of the Subject Securities to be effected.

 

2.2                               Restriction on Transfer of Voting Rights.  During the period from the date of this
Agreement through the Voting Covenant Expiration Date, Stockholder shall ensure
that (a) none of the Subject Securities is deposited into a voting trust and
(b) no proxy is granted, and no voting agreement or similar agreement is
entered into, with respect to any of the Subject Securities.

 

2.3                               Permitted Transfers.  Section 2.1 shall not prohibit a transfer of
Company Common Stock by Stockholder (a) to any member of his immediate family,
or to a trust for the benefit of Stockholder or any member of his immediate
family, (b) upon the death of Stockholder or (c) if Stockholder is a
partnership or limited liability company, to one or more partners or members of
Stockholder or to an affiliated corporation under common control with
Stockholder; provided, however,
that a transfer referred to in this sentence shall be permitted only if, as a
precondition to such transfer, the transferee agrees in a writing, reasonably
satisfactory in form and substance to the Investors, to be bound by the terms
of this Agreement.

 

SECTION 3.                            Voting
of Shares

 

3.1                               Voting Covenant.  Stockholder, solely in Stockholder’s capacity
as a stockholder of the Company, hereby agrees that, prior to the Voting
Covenant Expiration Date, at any meeting of the stockholders of the Company,
however called, and in any written action by consent of stockholders of the
Company, Stockholder shall cause all of the Subject Securities to be voted:

 

2

 

(a)                                  in
favor of the issuance of the Shares and the Warrants in the Offering, in favor
of each of the other actions contemplated by the Purchase Agreement and in
favor of any action in furtherance of any of the foregoing; and

 

(b)                                  against
any action or agreement that would result in a breach of any representation,
warranty, covenant or obligation of the Investors and/or the Company in the
Purchase Agreement or which could be expected to delay, prevent or adversely
affect the consummation of the transactions contemplated by the Purchase
Agreement (including, but not limited to, any matter submitted to stockholders
that would cause a failure of a closing condition in the Purchase Agreement).

 

Prior to the Voting
Covenant Expiration Date, Stockholder shall not enter into any agreement or
understanding with any Person to vote or give instructions in any manner
inconsistent with clause “(a)” or “(b)” of the preceding sentence.

 

3.2                               Proxy;
Further Assurances.

 

(a)                                  Contemporaneously
with the execution of this Agreement: 
(i) Stockholder shall deliver to the Investors a proxy in the form
attached to this Agreement as Exhibit A, which shall be irrevocable to the fullest
extent permitted by law (at all times prior to the Voting Covenant Expiration
Date) with respect to the shares referred to therein (the “Proxy”) and (ii)
Stockholder shall cause to be delivered to the Investors an additional proxy
(in the form attached hereto as Exhibit A) executed on behalf of the record owner of any
outstanding shares of Company Common Stock that are owned beneficially (within
the meaning of Rule 13d-3 under the Exchange Act), but not of record, by
Stockholder.

 

(b)                                  Stockholder
shall, at his or its own expense, perform such further acts and execute such
further proxies and other documents and instruments as may reasonably be
required to vest in the Investors the power to carry out and give effect to the
provisions of this Agreement.

 

SECTION
4.                            No
Solicitation

 

Stockholder agrees
that, during the period from the date of this Agreement through the Voting
Covenant Expiration Date, Stockholder shall not take, cause or permit (and
shall use its commercially reasonable efforts to ensure that none of its
officers, directors, agents or representatives takes, causes or permits) any
person to take, directly or indirectly, any of the following actions with any
third party:  (a) solicit, knowingly
encourage, initiate or participate in any negotiations, inquiries or
discussions with respect to any offer or proposal to acquire the business,
assets or capital shares of the Company (excluding non-exclusive licenses
entered into in the ordinary course of business), whether by merger,
consolidation, other business combination, purchase of capital stock, purchase
of assets, license, lease, tender or exchange offer or otherwise (each of the
foregoing, an “Alternative
Proposal”), (b) disclose, in connection with an Alternative
Proposal, any nonpublic information concerning the Company’s business or
properties or afford to any third party access to its properties, books or
records, except in the ordinary course of business and as required by law or
pursuant to a governmental request for information, (c) enter into or execute
any agreement providing for an Alternative Proposal or

 

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(d) make or authorize any
public statement, recommendation or solicitation in support of any Alternative
Proposal or any offer or proposal relating to an Alternative Proposal, other
than with respect to the Offering.

 

SECTION
5.                            Representations
and Warranties of Stockholder

 

Stockholder hereby
represents and warrants to the Investors as follows:

 

5.1                               Authorization, etc.  Stockholder has the absolute and
unrestricted right, power, authority and capacity to execute and deliver this
Agreement and the Proxy and to perform his or its obligations hereunder and
thereunder.  This Agreement and the
Proxy have been duly executed and delivered by Stockholder and constitute
legal, valid and binding obligations of Stockholder, enforceable against
Stockholder in accordance with their terms, subject to (a) laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
(b) rules of law governing specific performance, injunctive relief and other
equitable remedies.  If Stockholder is a
general or limited partnership, then Stockholder is a partnership duly
organized, validly existing and in good standing under the laws of the jurisdiction
in which it was organized.  If
Stockholder is a limited liability company, then Stockholder is a limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it was organized.

 

5.2                               No
Conflicts or Consents.

 

(a)                                  The
execution and delivery of this Agreement and the Proxy by Stockholder do not,
and the performance of this Agreement and the Proxy by Stockholder will not (i)
conflict with or violate any law, rule, regulation, order, decree or judgment
applicable to Stockholder or by which he or it or any of his or its properties
is or may be bound or affected, (ii) if Stockholder is not a natural person,
violate or conflict with the certificate of incorporation, bylaws or other
equivalent organizational documents of Stockholder or (iii) result in or
constitute (with or without notice or lapse of time) any breach of or default
under, or give to any other Person (with or without notice or lapse of time)
any right of termination, amendment, acceleration or cancellation of, or result
(with or without notice or lapse of time) in the creation of any encumbrance or
restriction on any of the Subject Securities pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Stockholder is a party or by which
Stockholder or any of his or its affiliates or properties is or may be bound or
affected.  There is no beneficiary or
holder of a voting trust certificate or other interest of any trust of which
Stockholder is a trustee whose consent is required for the execution and
delivery of this Agreement or the consummation by Stockholder of the
transactions contemplated by this Agreement.

 

(b)                                  The
execution and delivery of this Agreement and the Proxy by Stockholder do not,
and the performance of this Agreement and the Proxy by Stockholder will not,
require any consent, approval, authorization or permit of any Person.  Stockholder does not have any understanding
in effect with respect to the voting or transfer of any Subject
Securities.  Stockholder is not required
to make any filing with or notify any governmental or regulatory authority in
connection with this Agreement or the transactions contemplated thereby
pursuant to the requirements of the Hart-Scott-Rodino

 

4

 

Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder.  If Stockholder is a natural person and is married, and Stockholder’s
Subject Securities constitute community property or otherwise need spousal or
other approval for this Agreement to be legal, valid and binding on
Stockholder, this Agreement has been duly authorized, executed and delivered
by, and constitutes a valid and binding agreement of, Stockholder’s spouse,
enforceable against such spouse in accordance with its terms.

 

5.3                               Title to Securities.  As of the date of this Agreement, (a)
Stockholder holds of record (free and clear of any encumbrances or restrictions)
the number of outstanding shares of Company Common Stock set forth under the
heading “Shares Held of Record” on the signature page hereof, (b) Stockholder
holds (free and clear of any encumbrances or restrictions) the options,
warrants and other rights to acquire shares of Company Common Stock set forth
under the heading “Options and Other Rights” on the signature page hereof, (c)
Stockholder Owns the additional securities of the Company set forth under the
heading “Additional Securities Beneficially Owned” on the signature page hereof
and (d) Stockholder does not directly or indirectly Own any shares of capital
stock or other securities of the Company, or any option, warrant or other right
to acquire (by purchase, conversion or otherwise) any shares of capital stock
or other securities of the Company, other than the shares and options, warrants
and other rights set forth on the signature page hereof.

 

5.4                               Litigation.  There is no private or governmental action,
suit, proceeding, claim, arbitration or investigation pending or, to the
knowledge of Stockholder or any of Stockholder’s affiliates, threatened before
any agency, administration, court or tribunal, foreign or domestic, against
Stockholder or any of Stockholder’s affiliates or any of their respective
properties or any of their respective officers or directors, in the case of a
corporate entity (in their capacities as such), or any of their respective
partners (in the case of a partnership), that, individually or in the
aggregate, could reasonably be expected to materially delay or impair
Stockholder’s ability to consummate the transactions contemplated by this
Agreement.  There is no judgment, decree
or order against Stockholder or any of Stockholder’s affiliates, or, to the
knowledge of Stockholder or any of Stockholder’s affiliates, any of their
respective directors or officers (in their capacities as such), in the case of
a corporate entity, or any of their respective partners (in the case of a
partnership), that, individually or in the aggregate, could reasonably be
expected to prevent, enjoin, alter or delay any of the transactions
contemplated by this Agreement, or that, individually or in the aggregate,
could reasonably be expected to have an adverse effect on Stockholder’s ability
to consummate the transactions contemplated by this Agreement.

 

5.5                               Accuracy of Representations.  The representations and warranties contained
in this Agreement are accurate in all respects as of the date of this Agreement
and will be accurate in all respects at all times until the termination of this
Agreement.

 

SECTION
6.                            Additional
Covenants of Stockholder

 

6.1                               Further Assurances.  From time to time and without additional
consideration, Stockholder shall (at Stockholder’s sole expense) execute and
deliver, or cause to be executed and delivered, such additional transfers,
assignments, endorsements, proxies, consents and other instruments, and shall
(at Stockholder’s sole expense) take such further actions, as the Investors may
request for the purpose of carrying out and furthering the intent of this
Agreement.

 

5

 

SECTION
7.                            Miscellaneous

 

7.1                               Survival of Representations, Warranties and
Agreements.  All
representations, warranties, covenants and agreements made by Stockholder in
this Agreement shall survive (a) the Closing Date, (b) any termination of the
Purchase Agreement and/or this Agreement and (c) the Voting Covenant Expiration
Date.

 

7.2                               Expenses.  All costs and expenses incurred in
connection with the transactions contemplated by this Agreement shall be paid
by the party incurring such costs and expenses.

 

7.3                               Notices.  All notices, requests, consents and other communications
hereunder shall be in writing; shall be mailed (a) if within the domestic
United States, by first-class registered or certified airmail, by nationally
recognized overnight express courier, postage prepaid, or by facsimile or (b)
if delivered to or from outside the United States, by International Federal
Express or facsimile; shall be deemed given: (i) if delivered by first-class
registered or certified mail domestic, three business days after so mailed,
(ii) if delivered by nationally recognized overnight carrier, one business day
after so mailed, (iii) if delivered by International Federal Express, two
business days after so mailed or (iv) if delivered by facsimile, upon electric
confirmation of receipt; and shall be delivered as addressed as follows:

 

if to Stockholder:

 

at the address set forth on the signature page hereof; and

 

if to the Investors:

 

[address]

 

7.4                               Severability.  In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner.

 

7.5                               Entire Agreement.  This Agreement, the Proxy and any other
documents delivered by the parties in connection herewith constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings between the
parties with respect thereto.  No
addition to or modification of any provision of this Agreement shall be binding
upon either party unless made in writing and signed by both parties.

 

7.6                               Assignment; Binding Effect.  Except as provided herein, neither this
Agreement nor any of the interests or obligations hereunder may be assigned or
delegated by Stockholder, and any attempted or purported assignment or
delegation of any of such interests or obligations shall be void.  Subject to the preceding sentence, this
Agreement shall be binding upon Stockholder and his heirs, estate, executors
and  personal representatives and his or
its successors and assigns, and shall inure to the benefit of the Investors and
their successors and assigns.

 

6

 

Without limiting any of the restrictions set forth in Section 2 or
Section 6.1 or elsewhere in this Agreement, this Agreement shall be binding
upon any Person to whom any Subject Securities are transferred.  Nothing in this Agreement is intended to
confer on any Person (other than the Investors and their successors and
assigns) any rights or remedies of any nature. 
Notwithstanding the foregoing, any assignment, delegation or attempted
transfer of any rights, interests or obligations under this Agreement by
Stockholder without the prior written consent of the Investors shall be void.

 

7.7                               Indemnification.  Stockholder shall hold harmless and
indemnify the Investors from and against, and shall compensate and reimburse
the Investors for, any loss, damage, claim, liability, fee (including
attorneys’ fees), demand, cost or expense (regardless of whether or not such
loss, damage, claim, liability, fee, demand, cost or expense relates to a
third-party claim) that is directly or indirectly suffered or incurred by the
Investors, or to which the Investors otherwise become subject, and that arises
directly or indirectly from, or relates directly or indirectly to, (a) any
inaccuracy in or breach of any representation or warranty contained in this
Agreement or (b) any failure on the part of Stockholder to observe, perform or
abide by, or any other breach of, any restriction, covenant, obligation or
other provision contained in this Agreement or in the Proxy.

 

7.8                               Specific Performance.  The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement or the Proxy
were not performed in accordance with its specific terms or were otherwise
breached.  Stockholder agrees that, in
the event of any breach or threatened breach by Stockholder of any covenant or
obligation contained in this Agreement or in the Proxy, the Investors shall be
entitled (in addition to any other remedy that may be available to them,
including monetary damages) to seek and obtain (a) a decree or order of
specific performance to enforce the observance and performance of such covenant
or obligation, and (b) an injunction restraining such breach or threatened
breach.  Stockholder further agrees that
neither the Investors nor any other Person shall be required to obtain, furnish
or post any bond or similar instrument in connection with or as a condition to
obtaining any remedy referred to in this Section 7.8, and Stockholder
irrevocably waives any right he or it may have to require the obtaining,
furnishing or posting of any such bond or similar instrument.

 

7.9                               Non-Exclusivity.  The rights and remedies of the Investors
under this Agreement are not exclusive of or limited by any other rights or
remedies which it may have, whether at law, in equity, by contract or
otherwise, all of which shall be cumulative (and not alternative).  Without limiting the generality of the
foregoing, the rights and remedies of the Investors under this Agreement, and
the obligations and liabilities of Stockholder under this Agreement, are in
addition to their respective rights, remedies, obligations and liabilities
under common law requirements and under all applicable statutes, rules and
regulations.

 

7.10                        Governing Law; Venue.

 

(a)                                  This
Agreement and the Proxy shall be construed in accordance with, and governed in
all respects by, the laws of the State of Delaware (without giving effect to
principles of conflicts of laws).

 

(b)                                  Any
legal action or other legal proceeding relating to this Agreement or the Proxy
or the enforcement of any provision of this Agreement or the Proxy may be

 

7

 

brought or
otherwise commenced in any state or federal court located in the State of
Delaware.  Stockholder:

 

(i)                                     expressly
and irrevocably consents and submits to the jurisdiction of each state and
federal court located in the State of Delaware in connection with any such
legal proceeding;

 

(ii)                                  agrees
that service of any process, summons, notice or document by U.S. mail addressed
to him or it at the address set forth on the signature page hereof shall
constitute effective service of such process, summons, notice or document for
purposes of any such legal proceeding;

 

(iii)                               agrees that each state
and federal court located in the State of Delaware shall be deemed to be a
convenient forum; and

 

(iv)                              agrees
not to assert (by way of motion, as a defense or otherwise), in any such legal
proceeding commenced in any state or federal court located in the State of
Delaware, any claim that Stockholder is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in an
inconvenient forum, that the venue of such proceeding is improper or that this
Agreement or the subject matter of this Agreement may not be enforced in or by
such court.

 

Nothing contained
in this Section 7.10 shall be deemed to limit or otherwise affect the right of
the Investors to commence any legal proceeding or otherwise proceed against
Stockholder in any other forum or jurisdiction.

 

(c)                                  STOCKHOLDER
IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LEGAL
PROCEEDING RELATING TO THIS AGREEMENT OR THE PROXY OR THE ENFORCEMENT OF ANY
PROVISION OF THIS AGREEMENT OR THE PROXY.

 

7.11                        Counterparts.  This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.

 

7.12                        Headings.  The captions contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.

 

7.13                        Pronouns.  All pronouns contained herein, and any
variations thereof, shall be deemed to refer to the masculine, feminine or
neutral, singular or plural, as to the identity of the parties hereto may
require.

 

7.14                        Attorneys’ Fees.  In the event that any suit or action is
instituted under or in relation to this Agreement, including without limitation
to enforce any provision in this Agreement, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs and
expenses of enforcing any right of such prevailing party under or with respect

 

8

 

to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.

 

7.15                        No Waiver.  No failure on the part of the Investors to
exercise any power, right, privilege or remedy under this Agreement, and no
delay on the part of the Investors in exercising any power, right, privilege or
remedy under this Agreement, shall operate as a waiver of such power, right,
privilege or remedy; and no single or partial exercise of any such power,
right, privilege or remedy shall preclude any other or further exercise thereof
or of any other power, right, privilege or remedy.  The Investors shall not be deemed to have waived any claim
available to the Investors arising out of this Agreement, or any power, right,
privilege or remedy of the Investors under this Agreement, unless the waiver of
such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of the Investors, and
any such waiver shall not be applicable or have any effect except in the
specific instance in which it is given.

 

9

 

In Witness Whereof, the Investors
and Stockholder have caused this Agreement to be executed as of the date first
written above.

 

	
   

  	
  [Investors]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Stockholder

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Facsimile:

  	
   

  
						

 

 

	
  Shares Held

  of Record

  	
   

  	
  Options and

  Other Rights

  	
   

  	
  Additional Securities

  Beneficially Owned

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Exhibit A

Form of Irrevocable Proxy

 

The undersigned
stockholder (the “Stockholder”)
of Rigel
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), hereby
irrevocably (to the fullest extent permitted by law) appoints and constitutes
[                     ],
[                     ]
and [                     ],
and each of them, the exclusive attorneys and proxies of the Stockholder with
full power of substitution and resubstitution, to the full extent of the
Stockholder’s rights with respect to (i) the outstanding shares of capital
stock of the Company owned of record by the Stockholder as of the date of this
proxy, which shares are specified on the final page of this proxy and (ii) any
and all other shares of capital stock of the Company which the Stockholder may
acquire on or after the date hereof. 
(The shares of the capital stock of the Company referred to in clauses
“(i)” and “(ii)” of the immediately preceding sentence are collectively
referred to as the “Shares.”)  Upon the execution hereof, all prior proxies
given by the Stockholder with respect to any of the Shares are hereby revoked,
and the Stockholder agrees that no subsequent proxies will be given with
respect to any of the Shares.

 

This proxy is
irrevocable (to the fullest extent permitted by law), is coupled with an
interest and is granted in connection with the Voting Agreement, dated as of
the date hereof, between the Investors and the Stockholder (the “Voting Agreement”),
and is granted in consideration of the Investors entering into the Common Stock
and Warrant Purchase Agreement, dated as of the date hereof, among the Company
and the Investors (the “Purchase
Agreement”).  This proxy
will terminate on the Voting Covenant Expiration Date (as defined in the Voting
Agreement).

 

The attorneys and
proxies named above be, and each of them are, authorized and  empowered by the undersigned, and may
exercise this proxy, to vote the Shares, and to exercise all voting, consent
and similar rights of the undersigned with respect to the Shares until the
Voting Covenant Expiration Date at any meeting of the stockholders of the
Company, however called, and in connection with any written action by consent
of stockholders of the Company:

 

(i)                                     in
favor of issuance of the Shares and the Warrants (as defined in the Purchase
Agreement) in the Offering, in favor of each of the other actions contemplated
by the Purchase Agreement and in favor of any action in furtherance of any of
the foregoing; and

 

(ii)                                  against
any action or agreement that would result in a breach of any representation,
warranty, covenant or obligation of the Investors and/or the Company in the
Purchase Agreement or which could be expected to delay, prevent or adversely
affect the consummation of the transactions contemplated by the Purchase Agreement
(including, but not limited to, any matter submitted to stockholders that would
cause a failure of a closing condition in the Purchase Agreement).

 

The Stockholder
may vote the Shares on all other matters not referred to in this proxy, and the
attorneys and proxies named above may not exercise this proxy with respect to
such other matters.

 

A-1

 

This proxy shall
be binding upon the heirs, estate, executors, personal representatives,
successors and assigns of the Stockholder (including any transferee of any of
the Shares).

 

In case any
provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.

 

Dated: 
[                     ],
2003

 

	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name

  

 

A-2Exhibit 4.4

                           CERTIFICATE OF DESIGNATION
             OF THE RIGHTS AND PREFERENCES OF THE CLASS C---SERIES A
                           CONVERTIBLE PREFERRED STOCK
                         OF MATERIAL TECHNOLOGIES, INC.

         WHEREAS, the Articles of Incorporation of MATERIAL TECHNOLOGIES, INC.,
a corporation organized and existing under the laws of Delaware (the "Company"),
as amended, provide that the Company has authorized Fifty Million (50,000,000)
shares of par value $0.001 preferred stock ("Preferred Stock") and, further,
that the designation, powers, preferences and relative participating, option or
other special rights and qualifications, limitations or restrictions of the
shares of such Preferred Stock may be issued from time to time in one or more
series, each of such series to have such voting powers, designations,
preferences, and relative participating, optional or other special rights and
the qualifications, limitations or restrictions thereof, as expressed herein or
in a resolution or resolutions, providing for the issuance of such series,
adopted by the directors; and

         WHEREAS, THE COMPANY DOES HEREBY CERTIFY that pursuant to the authority
contained in its Articles of Incorporation, as amended, and in accordance with
the provisions of applicable laws of the state of Delaware, the Company's
directors have duly adopted the following resolutions determining the
Designations, Rights and Preferences of a special class of its authorized
Preferred Stock, herein designated as "Class C---Series A Convertible Preferred
Stock."

         RESOLVED, that pursuant to the authority vested in the directors of
this Company by its Articles of Incorporation, as amended, a special class of
preferred stock of the Company be and is hereby created out of the shares of
Preferred Stock available for issuance, such class to be designated as "Class C
Convertible Preferred Stock" (the "Class C---Series A Preferred Stock"),
consisting of 25,000,000 shares, of which the preferences and relative rights
and qualifications, limitations or restrictions thereof (in addition to those
set forth in the Company's Articles of Incorporation), shall be as follows:

1.       DEFINITINS

         Common Stock. The term "Common Stock" shall mean all shares now or
         hereafter authorized of any class of Common Stock of the Company and
         any other stock of the Company, howsoever designated, authorized after
         the Issue Date, which has the right (subject always to prior rights of
         any class or series of Preferred Stock) to participate in the
         distribution of the assets and earnings of the Company without limit as
         to per share amount.

         Issue Date.  The term "Issue Date" shall mean the date that shares of
         Class  C---Series A Preferred Stock are first issued by the Company.

         Junior Stock. The term "Junior Stock" shall mean, for purposes of these
         resolutions, any class or series of stock of the Company authorized
         after the Issue Date not entitled to receive any dividends in any
         dividend period unless any dividends required to have been paid or
         declared and set apart for payment on the Class C---Series A Preferred
         Stock shall have been so paid or declared and set apart for payment
         and, for purposes of these resolutions, shall mean Common Stock and any
         other class or series of stock of the Company authorized after the
         Issue Date not entitled to receive any assets upon liquidation,
         dissolution or winding up of the affairs of the Company until the Class
         C---Series A Preferred Stock shall have received the entire amount to
         which such stock is entitled upon such liquidation, dissolution or
         winding up.

         Parity Stock. The term "Parity Stock" shall mean, for purposes of these
         resolutions the Common Stock and any other class or series of stock of
         the Company authorized after the Issue Date entitled to receive payment
         of dividends subject only to those preferential rights of dividends
         granted to the Class C---Series A Preferred Stock and, for purposes of
         these resolutions, shall mean any class or series of stock of the
         Company authorized after the Issue Date entitled to receive assets upon
         liquidation, dissolution or winding up of the affairs of the Company
         subject to only those preferential rights and preference granted to the
         Class C---Series A Preferred Stock.

         Senior Stock. The term "Senior Stock" shall mean, for purposes of these
         resolutions, any class or series of stock of the Company authorized
         before the Issue Date of the Class C---Series A Preferred Stock except
         for those preferential rights as granted herein but the right to
         receive dividends providing all dividends granted to the Class
         C---Series A Preferred Stock shall have been paid or set aside to be
         paid, and, for purposes of these resolutions, shall mean any class or
         series of stock of the Company authorized after the Issue Date ranking
         equal to the Class C---Series A Preferred Stock and the right to
         participate in any distribution upon liquidation, dissolution or
         winding up of the affairs of the Company except for those preferential
         rights granted to the Class C---Series A Preferred Stock herein.

2.       Rights, Powers and Preferences

         The Class C---Series A Preferred Stock shall have the powers,
         preferences and relative, participating, optional and other special
         rights, qualifications, limitations and restrictions as follows:

         A.       Designation and Amount. All of the presently authorized
                  25,000,000 shares of par value $0.001 preferred stock shall
                  be designated as shares of "Class C Convertible Preferred
                  Stock" and par value set at $0.001 per share.

         B.       Rank. The Class C---Series A Preferred Stock shall be senior
                  to the Common Stock and shall be junior to all other series or
                  class of the Company's Preferred Stock issued prior to the
                  Issue Date.

         C.       Liquidation Rights.

                  (i)      In the event of any liquidation, dissolution, or
                           winding up of the Company, whether voluntary or
                           involuntary, the holders of the Class C---Series A
                           Preferred Stock then outstanding shall be entitled to
                           be paid out of the assets of the Company available
                           for distribution to its shareholders, before any
                           payment or declaration and setting apart for payment
                           of any amount shall be made in respect of any
                           outstanding capital stock of the Company, an amount
                           equal to $.001 per share. Then all of the assets of
                           the Company available to be distributed shall be
                           distributed ratably to the holders of the Class
                           C---Series A Preferred Stock and then to the holders
                           of other outstanding shares of capital stock of the
                           Company. If upon any liquidation, dissolution, or
                           winding up of the Company, whether voluntary or
                           involuntary, the assets to be distributed to the
                           holders of the Class C---Series A Preferred Stock
                           shall be insufficient to permit the payment to the
                           holders thereof the full preferential amount as
                           provided herein, then such available assets shall be
                           distributed ratably to the holders of the Class
                           C---Series A Preferred Stock.

                  (ii)     None of the following events shall be treated as or
                           deemed to be a liquidation hereunder:

                           (a)   A merger, consolidation or reorganization of
                                 the Company;

                           (b)   A sale or other transfer of all or
                                 substantially all of the Company's assets;

                           (c)   A sale of 50% or more of the Company's capital
                                 stock then issued and outstanding;

                           (d)   A purchase or redemption by the Company of
                                 stock of any class;  or

                           (e)   Payment of a dividend or distribution from
                                 funds legally available therefor.

         D.       Voting Righs.  All shares authorized herein and designated
                  as Class C---Series A Preferred Stock shares shall not have
                  any rights to vote on any matters where shareholders of the
                  Company are entitled to vote, until conversion of the Class
                  C---Series A Preferred Stock in accordance herewith.

3.       Dividends

         The holders of the Class  C---Series A Preferred  Stock shall be
         entitled to receive cumulative cash dividends at the rate of 8% simple
         interest per annum, for a period of two years. Provided however,
         dividends shall not accrue nor be payable for a given fiscal year
         except out of earnings generated by the Company, after interest, taxes,
         depreciation and administrative expenses ("EBITDA"), as calculated
         according to generally accepted accounting principals at the end of the
         Company's fiscal year.

         Without prior written consent of the majority of the holders of Class
         C---Series A Preferred Stock, so long as any shares of Class C---Series
         A Preferred Stock shall be outstanding, the Company shall not declare
         or pay on any Junior Stock any dividend whatsoever, whether in cash,
         property or otherwise, nor shall the Company make any distribution on
         any Junior Stock, nor shall any Junior Stock be purchased or redeemed
         by the Company or any of its subsidiaries of which it owns not less
         than 51% of the outstanding voting stock, nor shall any monies be paid
         or made available for a sinking fund for the purchase or redemption of
         any Junior Stock, unless all dividends to which the holders of Class
         C---Series A Preferred Stock shall have been entitled for all previous
         dividend periods shall have been paid or declared and a sum of money
         sufficient for the payment thereof is set apart.

4.       Conversion

         The Class C---Series A Preferred Stock shall have the following
         conversion rights (the "Conversion Rights"):

         A.       Holder's Optional Right to Convert. Each share of Class
                  C---Series A Preferred Stock shall be convertible, at the
                  option of the holder(s), on the Conversion Basis in effect at
                  the time of conversion.

         B.       Conversion Basis. Each share of Class C---Series A Preferred
                  Stock shall be convertible into shares of the Company's Common
                  Stock one a one-for one basis. By way of example, 100 shares
                  of Class C---Series A Preferred Stock shall be convertible
                  into 100 shares of Common Stock.

         C.       Mechanics of Conversion. Before any holder of Class C---Series
                  A Preferred Stock shall be entitled to convert the same into
                  shares of Common Stock, such holder shall (i) give written
                  notice to the Company, at the office of the Company or of its
                  transfer agent for the Common Stock or the Preferred Stock,
                  that he elects to convert the same and shall state therein the
                  number of shares of Class C---Series A Preferred Stock being
                  converted; and (ii) surrender the certificate or certificates
                  therefor, duly endorsed. Thereupon the Company shall promptly
                  issue and deliver to such holder of Class C---Series A
                  Preferred Stock a certificate or certificates for the number
                  of shares of Common Stock to which such holder shall be
                  entitled. The conversion shall be deemed to have been made and
                  the resulting shares of Common Stock shall be deemed to have
                  been issued immediately prior to the close of business on the
                  date of such notice and surrender of the shares of Class
                  C---Series A Preferred Stock.

         D.       Adjustments to the Conversion Basis.

                  (i)      Stock Splits and Combinations. At any time after the
                           Company first issues the Class C---Series A Preferred
                           Stock and while any of the shares of Class C---Series
                           A Preferred Stock remain outstanding, if the Company
                           shall effect a subdivision or combination of the
                           Common Stock subject to the Protective Provisions (as
                           defined below), the Conversion Basis then in effect
                           immediately before that subdivision or combination
                           shall be proportionately adjusted. Any adjustment
                           shall become effective at the close of business on
                           the date the subdivision or combination becomes
                           effective.

                  (ii)     Reclassification, Exchange or Substitution. At any
                           time after the Company first issues the Class
                           C---Series A Preferred Stock and while any of the
                           shares of Class C---Series A Preferred Stock remain
                           outstanding, if the Common Stock issuable upon the
                           conversion of the Class C---Series A Preferred Stock
                           shall be changed into the same or a different number
                           of shares of any class or classes of stock, whether
                           by capital reorganization, reclassification, or
                           otherwise (other than a subdivision or combination of
                           shares or stock dividend provided for above, or a
                           reorganization, merger, consolidation, or sale of
                           assets), then and in each such event the holder of
                           each share of Class C---Series A Preferred Stock
                           shall have the right thereafter to convert such
                           shares into the kind and amount of shares of stock
                           and other securities and property receivable upon
                           such reorganization, reclassification, or other
                           change, by holders of the number of shares of Common
                           Stock into which such shares of Class C---Series A
                           Preferred Stock might have been converted immediately
                           prior to such reorganization, reclassification, or
                           change, all subject to further adjustments as
                           provided herein.

                  (iii)    Reorganization, Mergers, Consolidations or Sales of
                           Assets. At any time after the Company first issues
                           the Class C---Series A Preferred Stock and while any
                           of such shares remain outstanding, if there shall be
                           a capital reorganization of the Common Stock (other
                           than a subdivision, combination, reclassification, or
                           exchange of shares), or a merger or consolidation of
                           the Company with or into another Company, or the sale
                           of all or substantially all of the Company's assets
                           to any other person, then as a part of such
                           reorganization, merger, consolidation, or sale,
                           provision shall be made so that the holders of the
                           Class C---Series A Preferred Stock thereafter shall
                           be entitled to receive upon conversion of the Class
                           C---Series A Preferred Stock, the number of shares of
                           stock or other securities or property of the Company,
                           or of the successor Company resulting from such
                           merger or consolidation or sale, to which a holder of
                           Class C---Series A Preferred Stock deliverable upon
                           conversion would have been entitled on such capital
                           reorganization, merger, consolidation, or sale.

         E.       Notices of Record Date. In the event of any reclassification
                  or recapitalization of the capital stock of the Company, any
                  merger or consolidation of the Company, or any transfer of all
                  or substantially all of the assets of the Company to any other
                  Company, entity, or person, or any voluntary or involuntary
                  dissolution, liquidating, or winding up of the Company, the
                  Company shall mail to each holder of Class C---Series A
                  Preferred Stock at least 30 days prior to the record date
                  specified therein, a notice specifying the date on which any
                  such reorganization, reclassification, transfer,
                  consolidation, merger, dissolution, liquidation, or winding up
                  is expected to become effective, and the time, if any is to be
                  fixed, as to when the holders of record of Common Stock (or
                  other securities) shall be entitled to exchange their shares
                  of Common Stock (or other securities) for securities or other
                  property deliverable upon such reorganization,
                  reclassification, transfer, consolidation, merger,
                  dissolution, liquidation, or winding up.

         F.       Fractional Shares. No fractional shares of Common Stock shall
                  be issued upon conversion of the Class C---Series A Preferred
                  Stock. In lieu of any fractional shares to which the holder
                  would otherwise be entitled, the Company shall pay cash equal
                  to the product of such fraction multiplied by the fair market
                  value of one share of the Company's Common Stock on the date
                  of conversion, as determined in good faith by the Company's
                  directors.

         G.       Reservation of Stock Issuable Upon Conversion. The Company
                  shall not be required to reserve or keep available out of its
                  authorized but unissued shares of Common Stock, any of its
                  shares of Common Stock that would be deliverable upon
                  conversion of the Class C---Series A Preferred Stock.

5.       Protective Provisions

         Notwithstanding anything contained herein to the contrary, including
         but not limited to paragraph 4.D above, so long as any of the Class
         C---Series A Preferred Stock shall be outstanding, the Company shall
         not without first obtaining the approval (by vote or written consent,
         as provided by law) of the holders of at least two-thirds of the total
         number of shares of Class C---Series A Preferred Stock outstanding:

         A.       Alter or change the rights, preferences or privileges of the
                  Class C---Series A Preferred Stock by way of reverse stock
                  split, reclassification, merger consolidation or otherwise, so
                  as to adversely affect in any manner the voting rights
                  including number of votes presently allowed or the conversion
                  basis by which the shares of Class C---Series A Preferred
                  Stock are presently converted into shares of Common Stock., or

         B.       Increase the authorized number of shares of Class C---Series A
                  Preferred Stock, provided however, this limitation shall not
                  prohibit the Company from authorizing and issuing a series of
                  additional shares of Class C Convertible Preferred Stock
                  without such approval.

6.       Reissuance

         No share or shares of Class C---Series A Preferred Stock acquired by
         the Company by reason of conversion or otherwise  shall be reissued as
         Class C---Series A Preferred Stock, and all such shares thereafter
         shall be returned to the status of undesignated and unissued shares of
         Preferred Stock of the Company.

8.       Headings or Subdivisions

         The heading of the various  subdivisions  hereof are for convenience of
         reference only and shall not affect the interpretation of any of the
         provisions hereto.

9.       Severability of Provisions

         If any right, preference or limitation of the Class C---Series A
         Preferred Stock set forth in this resolution (as such resolution may be
         amended from time to time) is invalid, unlawful or incapable of being
         enforced by reason of any rule of law or public policy, all other
         rights, preferences and limitations set forth in this resolution (as so
         amended) which can be given effect without the invalid, unlawful or
         unenforceable right, preference or limitation shall, nevertheless,
         remain in full force and effect, and no right, preference or limitation
         herein set forth shall be deemed dependent upon any other such right,
         preference or limitation unless so expressed herein.

10.      Status of Reacquired Stock

         Shares of Class C---Series A Preferred Stock which have been issued and
         reacquired in any manner shall, upon compliance with any applicable
         provisions of Delaware law, have the status of authorized and unissued
         shares of Preferred Stock and may be redesignated and reissued in any
         series or class."

         IN WITNESS WHEREOF, the undersigned Directors of Material Technologies,
Inc., a Delaware corporation, did hereby execute this Certificate effective
the _____ day of February, 2003.

                                       Robert M. Bernstein, Director

                                       __________________________________________
                                       Joel Freedman, Director

                                       __________________________________________
                                       John Goodman, Director

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