Document:

exv4w1

 

Exhibit 4.1

COMMON STOCK PURCHASE WARRANT

THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK DELIVERABLE UPON
EXERCISE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (“THE ACT”) AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (A) THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (B) THE SALE OF SUCH
SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE 144.

Date: October 18, 2006

Warrant to Purchase Common Stock

of

Cyberkinetics Neurotechnology Systems, Inc.

(Subject to Adjustment)

     THIS CERTIFIES THAT, for value received,                                          (“Holder”), is entitled,
subject to the terms and conditions of this Common Stock Purchase Warrant (this “Warrant”), at any
time or from time to time after the date hereof (the “Effective Date”), to purchase up to
                                                             (                    )
shares (the “Warrant Shares”) of Common Stock (as
defined below), from Cyberkinetics Neurotechnology Systems, Inc., a Delaware corporation (the
“Company”), at an exercise price per share equal to $1.40 (the “Purchase Price). This Warrant shall
expire at 5:00 p.m. Eastern Time on that date which is sixty (60) months from the date of this
Warrant (the “Expiration Date”). Both the number of shares of Common Stock purchasable upon
exercise of this Warrant and the Purchase Price are subject to adjustment and change as provided
herein. This Warrant is issued in connection with that certain Securities Purchase Agreement
executed by and among the Company, Holder and other parties.

1. CERTAIN DEFINITIONS. As used in this Warrant the following terms shall have the following
respective meanings:

     “1933 Act” shall mean the Securities Act of 1933, as amended.

     “Common Stock” shall mean the common stock of the Company, par value $0.001 per share, and any
other securities at any time receivable or issuable upon exercise of this Warrant.

 

 

     “Fair Market Value” or “FMV” of a share of Common Stock as of a particular date shall mean:

     (a) If traded on a securities exchange, the Fair Market Value shall be deemed to be the
average of the closing prices of the Common Stock of the Company on such exchange over the five (5)
business days ending immediately prior to the applicable date of valuation;

     (b) If actively traded over-the-counter, the Fair Market Value shall be deemed to be the
average of the closing bid prices over the 30-day period ending immediately prior to the applicable
date of valuation; and

     (c) If there is no active public market, the Fair Market Value shall be the value as
determined in good faith by the Company’s Board of Directors upon a review of relevant factors,
including due consideration of the Holders’ determination of the value of the Company.

     “SEC” shall mean the Securities and Exchange Commission.

2. EXERCISE OF WARRANT

     2.1 Exercise, Payment. Subject to compliance with the terms and conditions of this Warrant
and applicable securities laws, this Warrant may be exercised, in whole or in part at any time or
from time to time, on or before the Expiration Date by the delivery (including, without limitation,
delivery by facsimile) of the form of Notice of Exercise attached hereto as Exhibit 1 (the “Notice
of Exercise”), duly executed by the Holder, at the address of the Company as set forth herein, and
as soon as practicable after such date,

     (a) surrendering this Warrant at the address of the Company, and either

     (b) providing payment, by check or by wire transfer, of an amount equal to the product
obtained by multiplying the number of shares of Common Stock being purchased upon such exercise by
the then effective Purchase Price (the “Exercise Amount”),

     (c) if, by the Effectiveness Date (which shall have the meaning as set forth in the
Registration Rights Agreement), or at any time following the Effectiveness Date while the Company
is required to maintain an effective registration statement as required pursuant to the terms of a
Registration Rights Agreement dated as of the date hereof among the Company, the Holder and certain
other parties (the “Registration Rights Agreement”) the Warrant Shares have not been registered or
are not subject to an effective registration statement as required pursuant to the terms of a
Registration Rights Agreement, the Holder may elect, by written notice to the Company on the Notice
of Exercise duly executed by the Holder, to receive a number of Warrant Shares, determined in
accordance with the formula set forth below (the “Election”), in which event the Company shall
issue to the Holder a number of Warrant Shares computed using the following formula:

X= Y(A-B)/A

 

 

Where X = The number of Warrant Shares to be issued to the Holder upon an Election.

Y = The number of Warrant Shares in respect of which this Warrant is being exercised as adjusted to
the date of the Election.

A = The FMV of one Warrant Share on the date that the relevant Notice of Exercise is received by
the Company.

B = The Purchase Price (as adjusted to the date of the Election) in accordance with Section 4
hereof

     2.2 Limitation on Exercise / Beneficial Ownership. Unless the Holder shall have notified the
Company in writing prior the exercise of the Warrant, the Holder shall not have the right to
exercise this Warrant, and the Company shall use commercially reasonable efforts not to effect the
exercise of this Warrant (if the Company has knowledge that such exercise would result in
beneficial ownership in excess of 4.99%), to the extent that after giving effect to such exercise,
such Holder (together with such Holder’s affiliates) would beneficially own in excess of 4.99% of
the shares of Common Stock outstanding immediately after giving effect to such exercise. For
purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially
owned by such Person and its affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which the determination of such sentence is being
made, but shall exclude shares of Common Stock that would be issuable upon (i) exercise of the
remaining, unexercised portion of this Warrant beneficially owned by such Holder and its affiliates
and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities
of the Company beneficially owned by such Holder and its affiliates (including, without limitation,
any convertible notes or convertible preferred stock or warrants) subject to a limitation on
conversion or exercise analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of
this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely
on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent
Form 10-KSB, Form 10-QSB, Current Report on Form 8-K or other public filing with the Securities and
Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or
(3) any other notice by the Company or the Company’s transfer agent setting forth the number of
shares of Common Stock outstanding. For any reason at any time, upon the written request of the
Holder, the Company shall within one Business Day confirm in writing to the Holder the number of
shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of securities of the
Company, including the Warrants, by the Holder and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported.

     2.3 Common Stock Certificates; Fractional Shares. Following he Company’s receipt

 

 

of a Notice of Exercise, the Company will use commercially reasonable efforts to cause the delivery
within three (3) Trading Days of such receipt, to the person or persons entitled to receive the
same, a certificate or certificates for the number of whole shares of Common Stock issuable upon
such exercise. The Company shall register the number of shares of Common Stock issuable upon
exercise on the share register of the Company. No fractional shares or scrip representing
fractional shares of Common Stock shall be issued upon an exercise of this Warrant.

     2.3 Partial Exercise: Effective Date of Exercise. In case of any partial exercise of this
Warrant, the Holder and the Company shall cancel this Warrant upon surrender hereof and shall
execute and deliver a new Common Stock Purchase Warrant of like tenor and date for the balance of
the shares of Common Stock purchasable hereunder. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its surrender for exercise as
provided above. The Company acknowledges that the person entitled to receive the shares of Common
Stock issuable upon exercise of this Warrant shall be treated for all purposes as the holder of
record of such shares as of the close of business on the date the Holder is deemed to have
exercised this Warrant.

3. TAXES. The Company shall pay all taxes and other governmental charges that may be imposed in
respect of the delivery of shares upon exercise of this Warrant; provided, however, that the
Company shall not be required to pay any tax or other charge imposed in connection with any
transfer involved in the delivery of any certificate for shares of Common Stock in any name other
than that of the Holder of this Warrant, and in such case the Company shall not be required to
deliver any stock certificate until such tax or other charge has been paid, or it has been
established to the Company’s reasonable satisfaction that no tax or other charge is due.

4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF COMMON STOCK. The number of shares of Common Stock
deliverable upon exercise of this Warrant (or any shares of stock or other securities or property
receivable upon exercise of this Warrant) and the Purchase Price are subject to adjustment upon
occurrence of the following events:

     4.1 Adjustment for Stock Splits. Stock Subdivisions or Combinations of Shares of Common Stock.
The Purchase Price of this Warrant shall be proportionally decreased and the number of shares of
Common Stock deliverable upon exercise of this Warrant (or any shares of stock or other securities
at the time deliverable upon exercise of this Warrant) shall be proportionally increased to reflect
any stock split or subdivision of the Company’s Common Stock. The Purchase Price of this Warrant
shall be proportionally increased and the number of shares of Common Stock deliverable upon
exercise of this Warrant (or any shares of stock or other securities at the time deliverable upon
exercise of this Warrant) shall be proportionally decreased to reflect any combination of the
Company’s Common Stock.

     4.2 Adjustment for Dividends or Distributions of Stock or Other Securities or Property. If
the Company shall make or issue, or shall fix a record date for the determination of eligible
holders entitled to receive, a dividend or other distribution with respect to the Common Stock (or
any shares of stock or other securities at the time issuable upon exercise of the Warrant) payable
in (a) securities of the Company or (b) assets (excluding cash dividends paid or payable solely out
of retained earnings), then, in each such case, the Holder of this Warrant on

 

 

exercise hereof at any time after the consummation, effective date or record date of such dividend
or other distribution, shall receive, in addition to the shares of Common Stock (or such other
stock or securities) issuable on such exercise, and without the payment of additional consideration
therefor, the securities or such other assets of the Company to which such Holder would have been
entitled upon such date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of such exercise,
retained such shares and/or all other additional stock available by it as aforesaid during such
period giving effect to all adjustments called for by this Section 4.

     4.3 Reclassification. If the Company, by reclassification of securities or otherwise, shall
change any of the securities as to which purchase rights under this Warrant exist into the same or
a different number of securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have been issuable as
the result of such change `with respect to the securities that were subject to the purchase rights
under this Warrant immediately prior to such reclassification or other change and the Purchase
Price therefore shall be appropriately adjusted, all subject to further adjustment as provided in
this Section 4. No adjustment shall be made pursuant to this Section 4.3 upon any conversion or
redemption of the Common Stock which is the subject of Section 4.5.

     4.4 Adjustment for Capital Reorganization. Merger or Consolidation. In case of any capital
reorganization of the capital stock of the Company (other than a combination, reclassification,
exchange or subdivision of shares otherwise provided for herein), or any merger or consolidation of
the Company with or into another corporation, or the sale of all or substantially all the assets of
the Company then, and in each such case, as a part of such reorganization, merger, consolidation,
sale or transfer, lawful provision shall be made so that the Holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant (in all cases without regard to any
limitations on the exercise of this Warrant), during the period specified herein and upon payment
of the Purchase Price then in effect, the number of shares of stock or other securities or property
of the successor corporation resulting from such reorganization, merger, consolidation, sale or
transfer that a holder of the shares deliverable upon exercise of this Warrant would have been
entitled to receive in such reorganization, consolidation, merger, sale or transfer if this Warrant
had been exercised immediately before such reorganization, merger, consolidation, sale or transfer,
all subject to further adjustment as provided in this Section 4. The foregoing provisions of this
Section 4.4 shall similarly apply to successive reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are at the time receivable
upon the exercise of this Warrant. If the per-share consideration payable to the Holder hereof for
shares in connection with any such transaction is in a form other than cash or marketable
securities, then the value of such consideration shall be determined in good faith by the Company’s
Board of Directors. In all events, appropriate adjustment (as determined in good faith by the
Company’s Board of Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction, to the end that the
provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in
relation to any shares or other property deliverable after that event upon exercise of this
Warrant.

     4.5 Conversion of Common Stock. If all or any portion of the authorized and

 

 

outstanding shares of Common Stock of the Company are redeemed or converted or reclassified into
other securities or property pursuant to the Company’s Certificate of Incorporation or otherwise,
or the Common Stock otherwise ceases to exist, then, in such case, the Holder of this Warrant, upon
exercise hereof at any time after the date on which the Common Stock is so redeemed or converted,
reclassified or ceases to exist (the “Termination Date”), shall receive, in lieu of the number of
shares of Common Stock that would have been deliverable upon such exercise immediately prior to the
Termination Date, the securities or property that would have been received if this Warrant had been
exercised in full and the Common Stock received thereupon had been simultaneously converted
immediately prior to the Termination Date, all subject to further adjustment as provided in this
Warrant. Additionally, the Purchase Price shall be immediately adjusted to equal the quotient
obtained by dividing (x) the aggregate Purchase Price of the maximum number of shares of Common
Stock for which this Warrant was exercisable immediately prior to the Termination Date by (y) the
number of shares of Common Stock of the Company for which this Warrant is exercisable immediately
after the Termination Date, all subject to further adjustment as provided herein.

5. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory the Company of the
ownership of and the loss, theft, destruction or mutilation of this Warrant, and of indemnity
reasonably satisfactory to it, and (in the case of mutilation) upon surrender and cancellation of
this Warrant, the Company will cause to be executed and delivered in lieu thereof a new Warrant of
like tenor as the lost, stolen, destroyed or mutilated Warrant.

6. REPRESENTATION. The Company hereby covenants that all shares issuable upon exercise of this
Warrant, when delivered upon such exercise, shall be free and clear of all liens, security
interests, charges and other encumbrances or restrictions on sale and free and clear of all
preemptive rights, except encumbrances or restrictions arising under federal or state securities
laws. Further, the Company hereby covenants to reserve such number of authorized but unissued
shares of Common Stock for issuance upon exercise of this Warrant.

7. REGISTRATION. The Company has agreed to register the Warrant Shares pursuant to the Registration
Rights Agreement.

8. RESTRICTIONS ON TRANSFER.

     8.1 The Holder, by acceptance hereof, agrees that, absent an effective registration statement
filed with the SEC under the 1933 Act, covering the disposition or sale of this Warrant or the
Common Stock issued or issuable upon exercise hereof or the Common Stock issuable upon conversion
thereof, as the case may be, and registration or qualification under applicable state securities
laws, such Holder will not sell, transfer, pledge, or hypothecate any or all such Warrants or
Common Stock, as the case may be, unless either (i) the Company has received an opinion of counsel,
in form and substance reasonably satisfactory to the Company, to the effect that such registration
is not required in connection with such disposition or (ii) the sale of such securities is made
pursuant to SEC Rule 144 or pursuant to some other applicable exemption from registration.

     8.2 In addition to the foregoing restrictions on transfer, this Warrant may not be

 

 

transferred by the Holder without the prior written consent of the Company, which consent may not
be unreasonably withheld. In the event of a transfer to which the Company has previously consented
in writing, this Warrant and all rights hereunder may be transferred by the Holder upon delivery of
the form of Assignment attached hereto as Exhibit 2 (the “Assignment”), duly executed by the
Holder, surrender of this Warrant properly endorsed at the address of the Company set forth herein
and payment of any necessary transfer tax or other governmental charge imposed upon such transfer.
Upon any partial transfer, the Holder and Company will cause to be issued and delivered to the
Holder a new Warrant or Warrants with respect to the portion of this Warrant not so transferred.
Each taker and holder of this Warrant, by taking or holding the same, consents and agrees that when
this Warrant shall have been so endorsed, the person in possession of this Warrant may be treated
by the Company, and all other persons dealing with this Warrant, as the absolute owner hereof for
any purpose and as the person entitled to exercise the rights represented hereby, any notice to the
contrary notwithstanding; provided, however that until a transfer of this Warrant is duly
registered on the books of the Company, the Company may treat the Holder hereof as the owner for
all purposes

9. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder hereby represents,
warrants and covenants that he/she/it is an “accredited investor” as that term is defined under
Rule 501 of Regulation D, that any shares of stock purchased upon exercise of this Warrant or
acquired upon conversion thereof shall be acquired for investment only and not with a view to, or
for sale in connection with, any distribution thereof, that the Holder has had such opportunity as
such Holder has deemed adequate to obtain from representatives of the Company such information as
is necessary to permit the Holder to evaluate the merits and risks of its investment in the
Company; that the Holder is able to bear the economic risk of holding such shares as may be
acquired pursuant to the exercise of this Warrant for an indefinite period; that the Holder
understands that the shares of stock acquired pursuant to the exercise of this Warrant or acquired
upon conversion thereof may not be registered under the 1933 Act (unless otherwise required
pursuant to exercise by the Holder of the registration rights, if any, previously granted to the
Holder) and will be “restricted securities” within the meaning of Rule 144 under the 1933 Act and
that the exemption from registration under Rule 144 will not be available for at least one year
from the date of exercise of this Warrant, and even then will not be available unless a public
market then exists for the stock, adequate information concerning the Company is then available to
the public, and other terms and conditions of Rule 144 are complied with; and that all stock
certificates representing shares of stock issued to the Holder upon exercise of this Warrant or
upon conversion of such shares may have affixed thereto a legend substantially in the following
form:

 

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

10. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the Holder to any
voting rights or other rights as a stockholder of the Company. In the absence of affirmative action
by such Holder to purchase Common Stock by exercise of this Warrant, no provisions of this Warrant,
and no enumeration herein of the rights or privileges of the Holder hereof shall cause such Holder
hereof to be a stockholder of the Company for any purpose.

11. NOTICES. All notices and other communications required or permitted hereunder shall be in
writing and shall be mailed by registered or certified mail, postage prepaid, return receipt
requested, or by telecopier, or by email or otherwise delivered by hand or by messenger, addressed
or telecopied to the person to whom such notice or communication is being given at its address set
forth after its signature hereto. In order to be effective, a copy of any notice or communication
sent by telecopier or email must be sent by registered or certified mail, postage prepaid, return
receipt requested, or delivered personally to the person to whom such notice or communication is
being at its address set forth after its signature hereto. If notice is provided by mail, notice
shall be deemed to be given five (5) business days after proper deposit with the United States mail
or nationally recognized overnight courier, or immediately upon personally delivery thereof, to
person to whom such notice or communication is being at such address. If notice is provided by
telecopier, notice shall be deemed to be given upon confirmation by the telecopier machine of the
receipt of such notice at the telecopier number provided above. If notice is provided by email,
notice shall be deemed to be given upon confirmation by the sender’s email program of the receipt
of such notice at the email address provided after the signature of the person to whom such notice
or communication is being. The addresses set forth after the signatures hereto may be changed by
written notice complying with the terms of this Section 11.

12. HEADINGS. The headings in this Warrant are for purposes of convenience in reference only, and
shall not be deemed to constitute a part hereof.

13. GOVERNING LAW. This Warrant shall be construed and enforced in accordance with, and governed
by, the laws of the State of New York.

 

 

14. NOTICES OF RECORD DATE. In case the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the exercise of this Warrant), for
the purpose:

     (a) of entitling them to receive any dividend or other distribution, or any right to subscribe
for or purchase any shares of stock of any class or any other securities or to receive any other
right; or

     (b) of any consolidation or merger of the Company with or into another corporation, any
capital reorganization of the Company, any reclassification of the capital stock of the Company, or
any conveyance of all or substantially all of the assets of the Company to another corporation in
which holders of the Company’s stock are to receive stock, securities or property of another
corporation; or

     (c) of any voluntary dissolution, liquidation or winding-up of the Company; or

     (d) of any redemption of any outstanding capital stock of the Company; then, and in each such
case,

the Company will mail or cause to be mailed to the Holder of this Warrant a notice specifying, as
the case may be, (i) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation, winding-up, redemption or conversion
is to take place, and the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such stock or securities as at the time are receivable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be delivered at
least thirty (30) days prior to the date of the proposed action therein specified.

15. SEVERABILITY. If any term, provision, covenant or restriction of this Warrant is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Warrant shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.

16. SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a Saturday, Sunday or legal
holiday, the Expiration Date shall automatically be extended until 5:00 p.m. on the next business
day.

17. REMEDIES. In addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, the Holder and the Company will be entitled to specific
performance hereunder. The parties agree that monetary damages alone may not be adequate
compensation for any loss incurred by reason of any breach of obligations hereunder and agrees to
waive in any action for specific performance of any such obligation the defense that remedy at law
would be adequate.

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

     IN
WITNESS WHEREOF, the parties hereto have executed this Warrant as of this ___ day of
October, 2006.

	 	 	 	 	 
	 	CYBERKINETICS NEUROTECHNOLOGY

SYSTEMS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Timothy R. Surgenor 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	 Address for Notices:

100 Foxborough Boulevard, Suite 240

Foxborough, Massachusetts 02035

Facsimile: (508) 549-9985	 

SIGNATURE PAGE TO WARRANT

 

 

EXHIBIT 1

NOTICE OF EXERCISE

(To be executed upon exercise of Warrant)

WARRANT NO. ___ _______________

     The undersigned hereby irrevocably elects to exercise the right of purchase represented by the
within Warrant Certificate for, and to purchase thereunder, securities of Cyberkinetics
Neurotechnology Systems, Inc., as provided for therein, and (check the applicable box):

     o Tenders herewith payment of the exercise price in full in the form of cash or a~
certified or official bank check in same-day funds in the amount of $                     for                     
such securities.

     o If applicable pursuant to the cashless exercise feature set forth in Section 2.1(c).

     Please issue a certificate or certificates for such securities in the name of, and pay any
cash for any fractional share to (please print name, address and social security number):

	 	 	 	 	 
	Name: 	 	 	 	 
	 
	Address: 	 	 	 
	 
	Signature: 	 	 	 

Note: The above signature should correspond exactly with the name on the first page of this Warrant
Certificate or with the name of the assignee appearing in the assignment form below.

If said number of shares shall not be all the shares purchasable under the within Warrant
Certificate, a new Warrant Certificate is to be issued in the name of said undersigned for the
balance remaining of the shares purchasable thereunder rounded up to the next higher whole number
of shares.

 

 

EXHIBIT 2

ASSIGNMENT

(TO BE EXECUTED ONLY UPON ASSIGNMENT OF WARRANT CERTIFICATE)

WARRANT NO.-___

     For value received, hereby sells, assigns and transfers unto                                          the
within Warrant Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint                                                              attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect to the number of Warrants set
forth below, with full power of substitution in the premises:

	 	 	 	 	 
	NAME(s) OF ASSIGNEE(s)	 	ADDRESS(es) OF ASSIGNEE(s)	 	# OF WARRANTS
	 
	 	 	 	 
	 

	 	 

	 	 

	 
	 	 	 	 
	 

	 	 

	 	 

	 
	 	 	 	 
	 

	 	 

	 	 

And if said number of Warrants shall not be all the Warrants represented by the Warrant
Certificate, a new Warrant Certificate is to be issued in the name of said undersigned for the
balance remaining of the Warrants registered by said Warrant Certificate.

	 	 	 	 	 
	Dated:                                         , 200_

	 	 
	 
	Signature: 	 	 	 
	 

Notice: The signature to the foregoing Assignment must correspond to the name as written upon the
face of this security in every particular, without alteration or any change whatsoever;
signature(s) must be guaranteed by an eligible guarantor institution (banks, stock brokers, savings
and loan associations and credit unions with membership in an approved signature guarantee
medallion program) pursuant to Securities and Exchange Commission Rule l7Ad-15.exv4w2

 

Exhibit 4.2

COMMON STOCK PURCHASE WARRANT

THE WARRANT EVIDENCED OR CONSTITUTED HEREBY, AND ALL SHARES OF COMMON STOCK DELIVERABLE UPON
EXERCISE HEREUNDER, HAVE BEEN AND WILL BE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (“THE ACT”) AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (A) THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (B) THE SALE OF SUCH
SECURITIES IS MADE PURSUANT TO SECURITIES AND EXCHANGE COMMISSION RULE 144.

Date: October 18, 2006

Warrant to Purchase Common Stock

of

Cyberkinetics Neurotechnology Systems, Inc.

(Subject to Adjustment)

     THIS CERTIFIES THAT, for value received,                                          (“Holder”), is entitled,
subject to the terms and conditions of this Common Stock Purchase Warrant (this “Warrant”), at any
time or from time to time after the date hereof (the “Effective Date”), to purchase up to
                                         (                    ) shares (the “Warrant Shares”) of Common Stock (as
defined below), from Cyberkinetics Neurotechnology Systems, Inc., a Delaware corporation (the
“Company”), at an exercise price per share equal to $1.40 (the “Purchase Price). This Warrant shall
expire at 5:00 p.m. Eastern Time on that date which is sixty (60) months from the date of this
Warrant (the “Expiration Date”). Both the number of shares of Common Stock purchasable upon
exercise of this Warrant and the Purchase Price are subject to adjustment and change as provided
herein. This Warrant is issued in connection with that certain Securities Purchase Agreement
executed by and among the Company, Holder and other parties.

1. CERTAIN DEFINITIONS. As used in this Warrant the following terms shall have the following
respective meanings:

     “1933 Act” shall mean the Securities Act of 1933, as amended.

     “Common Stock” shall mean the common stock of the Company, par value $0.001 per share, and any
other securities at any time receivable or issuable upon exercise of this Warrant.

 

 

     “Fair Market Value” or “FMV” of a share of Common Stock as of a particular date shall mean:

     (a) If traded on a securities exchange, the Fair Market Value shall be deemed to be the
average of the closing prices of the Common Stock of the Company on such exchange over the five (5)
business days ending immediately prior to the applicable date of valuation;

     (b) If actively traded over-the-counter, the Fair Market Value shall be deemed to be the
average of the closing bid prices over the 30-day period ending immediately prior to the applicable
date of valuation; and

     (c) If there is no active public market, the Fair Market Value shall be the value as
determined in good faith by the Company’s Board of Directors upon a review of relevant factors,
including due consideration of the Holders’ determination of the value of the Company.

     “SEC” shall mean the Securities and Exchange Commission.

2. EXERCISE OF WARRANT

     2.1 Exercise, Payment. Subject to compliance with the terms and conditions of this Warrant
and applicable securities laws, this Warrant may be exercised, in whole or in part at any time or
from time to time, on or before the Expiration Date by the delivery (including, without limitation,
delivery by facsimile) of the form of Notice of Exercise attached hereto as Exhibit 1 (the “Notice
of Exercise”), duly executed by the Holder, at the address of the Company as set forth herein, and
as soon as practicable after such date,

     (a) surrendering this Warrant at the address of the Company, and either

     (b) providing payment, by check or by wire transfer, of an amount equal to the product
obtained by multiplying the number of shares of Common Stock being purchased upon such exercise by
the then effective Purchase Price (the “Exercise Amount”),

     (c) if, by the Effectiveness Date (which shall have the meaning as set forth in the
Registration Rights Agreement), or at any time following the Effectiveness Date while the Company
is required to maintain an effective registration statement as required pursuant to the terms of a
Registration Rights Agreement dated as of the date hereof among the Company, the Holder and certain
other parties (the “Registration Rights Agreement”) the Warrant Shares have not been registered or
are not subject to an effective registration statement as required pursuant to the terms of a
Registration Rights Agreement, the Holder may elect, by written notice to the Company on the Notice
of Exercise duly executed by the Holder, to receive a number of Warrant Shares, determined in
accordance with the formula set forth below (the “Election”), in which event the Company shall
issue to the Holder a number of Warrant Shares computed using the following formula:

X= Y(A-B)/A

 

 

Where X = The number of Warrant Shares to be issued to the Holder upon an Election.

Y = The number of Warrant Shares in respect of which this Warrant is being exercised as adjusted to
the date of the Election.

A = The FMV of one Warrant Share on the date that the relevant Notice of Exercise is received by
the Company.

B = The Purchase Price (as adjusted to the date of the Election) in accordance with Section 4
hereof

     2.2 Limitation on Exercise / Beneficial Ownership. The Holder shall not have the right to
exercise this Warrant, and the Company shall use commercially reasonable efforts not to effect the
exercise of this Warrant (if the Company has knowledge that such exercise would result in
beneficial ownership in excess of 4.99% (the “Maximum Percentage”)), to the extent that after
giving effect to such exercise, such Holder (together with such Holder’s affiliates) would
beneficially own in excess of 4.99% of the shares of Common Stock outstanding immediately after
giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of
shares of Common Stock beneficially owned by such Person and its affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude shares of Common Stock that would
be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially
owned by such Holder and its affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially owned by such Holder and
its affiliates (including, without limitation, any convertible notes or convertible preferred stock
or warrants) subject to a limitation on conversion or exercise analogous to the limitation
contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph,
beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (1) the Company’s most recent Form 10-KSB, Form 10-QSB, Current Report
on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be,
(2) a more recent public announcement by the Company or (3) any other notice by the Company or the
Company’s transfer agent setting forth the number of shares of Common Stock outstanding. For any
reason at any time, upon the written request of the Holder, the Company shall within one Business
Day confirm in writing to the Holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including the Warrants, by the Holder and
its affiliates since the date as of which such number of outstanding shares of Common Stock was
reported. By written notice to the Company, the Holder may from time to time increase or decrease
the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice;
provided that (i) any such increase will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company, and (ii) any such increase or decrease will
apply only to the Holder and not to any other holder of SPA Warrants.

 

 

     2.3 Common Stock Certificates; Fractional Shares. Following he Company’s receipt of a Notice
of Exercise, the Company will use commercially reasonable efforts to cause the delivery within
three (3) Trading Days of such receipt, to the person or persons entitled to receive the same, a
certificate or certificates for the number of whole shares of Common Stock issuable upon such
exercise. The Company shall register the number of shares of Common Stock issuable upon exercise
on the share register of the Company. No fractional shares or scrip representing fractional shares
of Common Stock shall be issued upon an exercise of this Warrant.

     2.3 Partial Exercise: Effective Date of Exercise. In case of any partial exercise of this
Warrant, the Holder and the Company shall cancel this Warrant upon surrender hereof and shall
execute and deliver a new Common Stock Purchase Warrant of like tenor and date for the balance of
the shares of Common Stock purchasable hereunder. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its surrender for exercise as
provided above. The Company acknowledges that the person entitled to receive the shares of Common
Stock issuable upon exercise of this Warrant shall be treated for all purposes as the holder of
record of such shares as of the close of business on the date the Holder is deemed to have
exercised this Warrant.

3. TAXES. The Company shall pay all taxes and other governmental charges that may be imposed in
respect of the delivery of shares upon exercise of this Warrant; provided, however, that the
Company shall not be required to pay any tax or other charge imposed in connection with any
transfer involved in the delivery of any certificate for shares of Common Stock in any name other
than that of the Holder of this Warrant, and in such case the Company shall not be required to
deliver any stock certificate until such tax or other charge has been paid, or it has been
established to the Company’s reasonable satisfaction that no tax or other charge is due.

4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF COMMON STOCK. The number of shares of Common Stock
deliverable upon exercise of this Warrant (or any shares of stock or other securities or property
receivable upon exercise of this Warrant) and the Purchase Price are subject to adjustment upon
occurrence of the following events:

     4.1 Adjustment for Stock Splits. Stock Subdivisions or Combinations of Shares of Common Stock.
The Purchase Price of this Warrant shall be proportionally decreased and the number of shares of
Common Stock deliverable upon exercise of this Warrant (or any shares of stock or other securities
at the time deliverable upon exercise of this Warrant) shall be proportionally increased to reflect
any stock split or subdivision of the Company’s Common Stock. The Purchase Price of this Warrant
shall be proportionally increased and the number of shares of Common Stock deliverable upon
exercise of this Warrant (or any shares of stock or other securities at the time deliverable upon
exercise of this Warrant) shall be proportionally decreased to reflect any combination of the
Company’s Common Stock.

     4.2 Adjustment for Dividends or Distributions of Stock or Other Securities or Property. If
the Company shall make or issue, or shall fix a record date for the determination of eligible
holders entitled to receive, a dividend or other distribution with respect to the Common Stock (or
any shares of stock or other securities at the time issuable upon exercise of the Warrant) payable
in (a) securities of the Company or (b) assets (excluding cash dividends paid or

 

 

payable solely out of retained earnings), then, in each such case, the Holder of this Warrant on
exercise hereof at any time after the consummation, effective date or record date of such dividend
or other distribution, shall receive, in addition to the shares of Common Stock (or such other
stock or securities) issuable on such exercise, and without the payment of additional consideration
therefor, the securities or such other assets of the Company to which such Holder would have been
entitled upon such date if such Holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of such exercise,
retained such shares and/or all other additional stock available by it as aforesaid during such
period giving effect to all adjustments called for by this Section 4.

     4.3 Reclassification. If the Company, by reclassification of securities or otherwise, shall
change any of the securities as to which purchase rights under this Warrant exist into the same or
a different number of securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have been issuable as
the result of such change `with respect to the securities that were subject to the purchase rights
under this Warrant immediately prior to such reclassification or other change and the Purchase
Price therefore shall be appropriately adjusted, all subject to further adjustment as provided in
this Section 4. No adjustment shall be made pursuant to this Section 4.3 upon any conversion or
redemption of the Common Stock which is the subject of Section 4.5.

     4.4 Adjustment for Capital Reorganization. Merger or Consolidation. In case of any capital
reorganization of the capital stock of the Company (other than a combination, reclassification,
exchange or subdivision of shares otherwise provided for herein), or any merger or consolidation of
the Company with or into another corporation, or the sale of all or substantially all the assets of
the Company then, and in each such case, as a part of such reorganization, merger, consolidation,
sale or transfer, lawful provision shall be made so that the Holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant (in all cases without regard to any
limitations on the exercise of this Warrant), during the period specified herein and upon payment
of the Purchase Price then in effect, the number of shares of stock or other securities or property
of the successor corporation resulting from such reorganization, merger, consolidation, sale or
transfer that a holder of the shares deliverable upon exercise of this Warrant would have been
entitled to receive in such reorganization, consolidation, merger, sale or transfer if this Warrant
had been exercised immediately before such reorganization, merger, consolidation, sale or transfer,
all subject to further adjustment as provided in this Section 4. The foregoing provisions of this
Section 4.4 shall similarly apply to successive reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are at the time receivable
upon the exercise of this Warrant. If the per-share consideration payable to the Holder hereof for
shares in connection with any such transaction is in a form other than cash or marketable
securities, then the value of such consideration shall be determined in good faith by the Company’s
Board of Directors. In all events, appropriate adjustment (as determined in good faith by the
Company’s Board of Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the Holder after the transaction, to the end that the
provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in
relation to any shares or other property deliverable after that event upon exercise of this
Warrant.

     4.5 Conversion of Common Stock. If all or any portion of the authorized and

 

 

outstanding shares of Common Stock of the Company are redeemed or converted or reclassified into
other securities or property pursuant to the Company’s Certificate of Incorporation or otherwise,
or the Common Stock otherwise ceases to exist, then, in such case, the Holder of this Warrant, upon
exercise hereof at any time after the date on which the Common Stock is so redeemed or converted,
reclassified or ceases to exist (the “Termination Date”), shall receive, in lieu of the number of
shares of Common Stock that would have been deliverable upon such exercise immediately prior to the
Termination Date, the securities or property that would have been received if this Warrant had been
exercised in full and the Common Stock received thereupon had been simultaneously converted
immediately prior to the Termination Date, all subject to further adjustment as provided in this
Warrant. Additionally, the Purchase Price shall be immediately adjusted to equal the quotient
obtained by dividing (x) the aggregate Purchase Price of the maximum number of shares of Common
Stock for which this Warrant was exercisable immediately prior to the Termination Date by (y) the
number of shares of Common Stock of the Company for which this Warrant is exercisable immediately
after the Termination Date, all subject to further adjustment as provided herein.

5. LOSS OR MUTILATION. Upon receipt of evidence reasonably satisfactory the Company of the
ownership of and the loss, theft, destruction or mutilation of this Warrant, and of indemnity
reasonably satisfactory to it, and (in the case of mutilation) upon surrender and cancellation of
this Warrant, the Company will cause to be executed and delivered in lieu thereof a new Warrant of
like tenor as the lost, stolen, destroyed or mutilated Warrant.

6. REPRESENTATION. The Company hereby covenants that all shares issuable upon exercise of this
Warrant, when delivered upon such exercise, shall be free and clear of all liens, security
interests, charges and other encumbrances or restrictions on sale and free and clear of all
preemptive rights, except encumbrances or restrictions arising under federal or state securities
laws. Further, the Company hereby covenants to reserve such number of authorized but unissued
shares of Common Stock for issuance upon exercise of this Warrant.

7. REGISTRATION. The Company has agreed to register the Warrant Shares pursuant to the Registration
Rights Agreement.

8. RESTRICTIONS ON TRANSFER.

     8.1 The Holder, by acceptance hereof, agrees that, absent an effective registration statement
filed with the SEC under the 1933 Act, covering the disposition or sale of this Warrant or the
Common Stock issued or issuable upon exercise hereof or the Common Stock issuable upon conversion
thereof, as the case may be, and registration or qualification under applicable state securities
laws, such Holder will not sell, transfer, pledge, or hypothecate any or all such Warrants or
Common Stock, as the case may be, unless either (i) the Company has received an opinion of counsel,
in form and substance reasonably satisfactory to the Company, to the effect that such registration
is not required in connection with such disposition or (ii) the sale of such securities is made
pursuant to SEC Rule 144 or pursuant to some other applicable exemption from registration.

     8.2 In addition to the foregoing restrictions on transfer, this Warrant may not be transferred
by the Holder without the prior written consent of the Company, which consent may

 

 

not be unreasonably withheld. In the event of a transfer to which the Company has previously
consented in writing, this Warrant and all rights hereunder may be transferred by the Holder upon
delivery of the form of Assignment attached hereto as Exhibit 2 (the “Assignment”), duly executed
by the Holder, surrender of this Warrant properly endorsed at the address of the Company set forth
herein and payment of any necessary transfer tax or other governmental charge imposed upon such
transfer. Upon any partial transfer, the Holder and Company will cause to be issued and delivered
to the Holder a new Warrant or Warrants with respect to the portion of this Warrant not so
transferred. Each taker and holder of this Warrant, by taking or holding the same, consents and
agrees that when this Warrant shall have been so endorsed, the person in possession of this Warrant
may be treated by the Company, and all other persons dealing with this Warrant, as the absolute
owner hereof for any purpose and as the person entitled to exercise the rights represented hereby,
any notice to the contrary notwithstanding; provided, however that until a transfer of this Warrant
is duly registered on the books of the Company, the Company may treat the Holder hereof as the
owner for all purposes

9. COMPLIANCE WITH SECURITIES LAWS. By acceptance of this Warrant, the Holder hereby represents,
warrants and covenants that he/she/it is an “accredited investor” as that term is defined under
Rule 501 of Regulation D, that any shares of stock purchased upon exercise of this Warrant or
acquired upon conversion thereof shall be acquired for investment only and not with a view to, or
for sale in connection with, any distribution thereof, that the Holder has had such opportunity as
such Holder has deemed adequate to obtain from representatives of the Company such information as
is necessary to permit the Holder to evaluate the merits and risks of its investment in the
Company; that the Holder is able to bear the economic risk of holding such shares as may be
acquired pursuant to the exercise of this Warrant for an indefinite period; that the Holder
understands that the shares of stock acquired pursuant to the exercise of this Warrant or acquired
upon conversion thereof may not be registered under the 1933 Act (unless otherwise required
pursuant to exercise by the Holder of the registration rights, if any, previously granted to the
Holder) and will be “restricted securities” within the meaning of Rule 144 under the 1933 Act and
that the exemption from registration under Rule 144 will not be available for at least one year
from the date of exercise of this Warrant, and even then will not be available unless a public
market then exists for the stock, adequate information concerning the Company is then available to
the public, and other terms and conditions of Rule 144 are complied with; and that all stock
certificates representing shares of stock issued to the Holder upon exercise of this Warrant or
upon conversion of such shares may have affixed thereto a legend substantially in the following
form:

 

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

10. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant shall not entitle the Holder to any
voting rights or other rights as a stockholder of the Company. In the absence of affirmative action
by such Holder to purchase Common Stock by exercise of this Warrant, no provisions of this Warrant,
and no enumeration herein of the rights or privileges of the Holder hereof shall cause such Holder
hereof to be a stockholder of the Company for any purpose.

11. NOTICES. All notices and other communications required or permitted hereunder shall be in
writing and shall be mailed by registered or certified mail, postage prepaid, return receipt
requested, or by telecopier, or by email or otherwise delivered by hand or by messenger, addressed
or telecopied to the person to whom such notice or communication is being given at its address set
forth after its signature hereto. In order to be effective, a copy of any notice or communication
sent by telecopier or email must be sent by registered or certified mail, postage prepaid, return
receipt requested, or delivered personally to the person to whom such notice or communication is
being at its address set forth after its signature hereto. If notice is provided by mail, notice
shall be deemed to be given five (5) business days after proper deposit with the United States mail
or nationally recognized overnight courier, or immediately upon personally delivery thereof, to
person to whom such notice or communication is being at such address. If notice is provided by
telecopier, notice shall be deemed to be given upon confirmation by the telecopier machine of the
receipt of such notice at the telecopier number provided above. If notice is provided by email,
notice shall be deemed to be given upon confirmation by the sender’s email program of the receipt
of such notice at the email address provided after the signature of the person to whom such notice
or communication is being. The addresses set forth after the signatures hereto may be changed by
written notice complying with the terms of this Section 11.

12. HEADINGS. The headings in this Warrant are for purposes of convenience in reference only, and
shall not be deemed to constitute a part hereof.

13. GOVERNING LAW. This Warrant shall be construed and enforced in accordance with, and governed
by, the laws of the State of New York.

14. NOTICES OF RECORD DATE. In case the Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the exercise of this Warrant), for
the purpose:

 

 

     (a) of entitling them to receive any dividend or other distribution, or any right to subscribe
for or purchase any shares of stock of any class or any other securities or to receive any other
right; or

     (b) of any consolidation or merger of the Company with or into another corporation, any
capital reorganization of the Company, any reclassification of the capital stock of the Company, or
any conveyance of all or substantially all of the assets of the Company to another corporation in
which holders of the Company’s stock are to receive stock, securities or property of another
corporation; or

     (c) of any voluntary dissolution, liquidation or winding-up of the Company; or

     (d) of any redemption of any outstanding capital stock of the Company; then, and in each such
case,

the Company will mail or cause to be mailed to the Holder of this Warrant a notice specifying, as
the case may be, (i) the date on which a record is to be taken for the purpose of such dividend,
distribution or right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation, winding-up, redemption or conversion
is to take place, and the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such stock or securities as at the time are receivable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be delivered at
least thirty (30) days prior to the date of the proposed action therein specified.

15. SEVERABILITY. If any term, provision, covenant or restriction of this Warrant is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Warrant shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.

16. SATURDAYS, SUNDAYS AND HOLIDAYS. If the Expiration Date falls on a Saturday, Sunday or legal
holiday, the Expiration Date shall automatically be extended until 5:00 p.m. on the next business
day.

17. REMEDIES. In addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, the Holder and the Company will be entitled to specific
performance hereunder. The parties agree that monetary damages alone may not be adequate
compensation for any loss incurred by reason of any breach of obligations hereunder and agrees to
waive in any action for specific performance of any such obligation the defense that remedy at law
would be adequate.

[SIGNATURE PAGE FOLLOWS]

 

 

     IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of this                      day of
October, 2006.

	 	 	 	 	 
	 	CYBERKINETICS NEUROTECHNOLOGY

SYSTEMS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Timothy R. Surgenor 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	Address for Notices:

100 Foxborough Boulevard, Suite 240

Foxborough, Massachusetts 02035

Facsimile: (508) 549-9985 	 

SIGNATURE PAGE TO WARRANT

 

 

EXHIBIT 1

NOTICE OF EXERCISE

(To be executed upon exercise of Warrant)

WARRANT NO. ___ _______________

     The undersigned hereby irrevocably elects to exercise the right of purchase represented by the
within Warrant Certificate for, and to purchase thereunder, securities of Cyberkinetics
Neurotechnology Systems, Inc., as provided for therein, and (check the applicable box):

     o Tenders herewith payment of the exercise price in full in the form of cash or a~
certified or official bank check in same-day funds in the amount of $                     for                     
such securities.

     o If applicable pursuant to the cashless exercise feature set forth in Section 2.1(c).

     Please issue a certificate or certificates for such securities in the name of, and pay any
cash for any fractional share to (please print name, address and social security number):

	 	 	 	 	 
	Name:

	 	 	 	 
	 

	 	 	 	 
	 
	Address:
	 	 	 	 
	 

	 	 	 	 
	 
	Signature:
	 	 	 	 
	 

	 	 	 	 

Note: The above signature should correspond exactly with the name on the first page of this Warrant
Certificate or with the name of the assignee appearing in the assignment form below.

If said number of shares shall not be all the shares purchasable under the within Warrant
Certificate, a new Warrant Certificate is to be issued in the name of said undersigned for the
balance remaining of the shares purchasable thereunder rounded up to the next higher whole number
of shares.

 

 

EXHIBIT 2

ASSIGNMENT

(TO BE EXECUTED ONLY UPON ASSIGNMENT OF WARRANT CERTIFICATE)

WARRANT NO.-        

     For value received, hereby sells, assigns and transfers unto                                          the
within Warrant Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint                                          attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect to the number of Warrants set
forth below, with full power of substitution in the premises:

	 	 	 	 	 
	 NAME(s) OF ASSIGNEE(s)	 	ADDRESS(es) OF ASSIGNEE(s)	 	# OF WARRANTS
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

And if said number of Warrants shall not be all the Warrants represented by the Warrant
Certificate, a new Warrant Certificate is to be issued in the name of said undersigned for the
balance remaining of the Warrants registered by said Warrant Certificate.

Dated:                                         , 200_

	 	 	 	 	 
	Signature:

	 	 	 	 
	 

	 	 	 	 

Notice: The signature to the foregoing Assignment must correspond to the name as written upon the
face of this security in every particular, without alteration or any change whatsoever;
signature(s) must be guaranteed by an eligible guarantor institution (banks, stock brokers, savings
and loan associations and credit unions with membership in an approved signature guarantee
medallion program) pursuant to Securities and Exchange Commission Rule l7Ad-15.

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