Document:

EX-4.4

 

Exhibit 4.4

WARRANT

TO PURCHASE COMMON STOCK

OF BIODEL INC.

JULY 19, 2006

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

	 	 	 
	 

	 	Warrant to Purchase [                    ]
	 

	 	Shares (subject to adjustment)
	 

	 	of Common Stock

BIODEL INC.

COMMON STOCK PURCHASE WARRANT

Void after July 19, 2013

     BIODEL, INC. (the “Company”), a Delaware corporation, hereby certifies that for value
received, [                                        ] (“Holder”), or [its] [his/her] successors or assigns (the “Holder”), is
entitled to purchase, subject to the terms and conditions hereinafter set forth, an aggregate of
[                    ] fully paid and nonassessable shares of Common Stock (as hereinafter defined) of the Company,
at an exercise price of $3.94 per share, subject to adjustment as provided herein (the “Purchase
Price”), at any time or from time to time prior to 5:00 P.M., New York City time, on July 19, 2013
(the “Expiration Date”).

     This Warrant is issued pursuant to the Subscription Rights and Investment Representation
Agreements between the Company, on the one hand, and each holder of the Company’s Units, consisting
of a 7% Note and a seven-year warrant (the “Units”), issued by the Company pursuant to that
certain Private Placement Memorandum dated February 2006 and delivered to the holders of such Units
by the Company in connection with the offer for sale and sale of the Units.

 

 

     1. Definitions. For the purposes of this Warrant, the following terms shall have the
meanings indicated:

          “Base Dilution Price” shall have the meaning ascribed to such term in Section 3(b).

          “Board” shall mean the Board of Directors of the Company.

          “Business Day” shall mean any day other than a Saturday, Sunday or other day on which
commercial banks in the City of New York are authorized or required by law or executive order to
close.

          “Closing Price” shall mean, with respect to each share of Common Stock for any day,
(a) the last reported sale price regular way or, in case no such sale takes place on such day, the
average of the closing bid and asked prices regular way, in either case as reported on the
principal national securities exchange on which the Common Stock is listed or admitted for trading
or (b) if the Common Stock is not listed or admitted for trading on any national securities
exchange, the last reported sale price or, in case no such sale takes place on such day, the
average of the highest reported bid and the lowest reported asked quotation for the Common Stock,
in either case as reported on the NASDAQ or a similar service if NASDAQ is no longer reporting such
information or (c) if the Closing Price is not reported as provided in clauses (a) or (b), Closing
Price shall mean the price determined in good faith by the Board.

          “Common Stock” means the common stock, par value $0.01 per share, of the Company, and
any class of stock resulting from successive changes or reclassification of such Common Stock.

          “Company” has the meaning ascribed to such term in the first paragraph of this
Warrant.

          “Current Market Price” shall be determined in accordance with Subsection 3(e).

          “Dilution Price” shall mean, with respect to each share of Common Stock, $3.94 as
adjusted in accordance with the terms of Section 3, it being understood that this price is based on
the representation of the Company in the Purchase Agreement that there are 22,784,379 shares of
Common Stock outstanding on a fully diluted basis on the date hereof.

          “Election to Purchase Shares” shall have the meaning ascribed to such term in Section
2(a).

          “Exercise Date” has the meaning ascribed to such term in Subsection 2(d).

          “Expiration Date” has the meaning ascribed to such term in the first paragraph of this
Warrant.

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          “Holder” has the meaning ascribed to such term in the first paragraph and Section 9 of
this Warrant.

          “Issued Warrant Shares” means any shares of Common Stock issued upon exercise of the
Warrant.

          “NASDAQ” shall mean the Automatic Quotation System of the National Association of
Securities Dealers, Inc.

          “Person” shall mean any individual, firm, corporation, limited liability company,
partnership, trust, incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of any kind, and shall
include any successor (by merger or otherwise) of such entity.

          “Purchase Agreement” has the meaning ascribed to such term in the second paragraph of
this Warrant.

          “Purchase Price” has the meaning ascribed to such term in the first paragraph of this
Warrant.

          “Qualified Subsequent Investment” shall mean the raising of equity capital by the
Company of at least $10,000,000.

          “Securities” shall have the meaning ascribed to such term in Section 3(d)(i).

          “Subject Securities” shall have the meaning ascribed to such term in Section
3(d)(iii).

          “Successful Superiority Trial” shall mean completion of the ViajectTM 010JM trial
currently being conducted, in addition to the following:

     A. The results of such trial demonstrate that ViajectTM achieves better glucose
control than the FDA comparator, Humulin® when administered before a standardized
meal to patients with Type 1 diabetes.

     B. For the purposes of such trial, the Area Under the Curve (AUC) for blood
glucose in the first two hours after ingesting a standardized meal, with base-line
values subtracted, shall be measured in the same patients on separate days, after
administration of either Humulin® or ViajectTM at the same dose. A student’s
two-tailed “t” test, with the probability of an alpha error set at equal to or less
than 0.05 will be applied to the data.

     C. The standard set for such trial is such that if the AUC for blood glucose in
the first two hours after ingestion of a standardized meal of the patients treated
with ViajectTM is statistically significantly lower than those same patients

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treated
with the same dose of Humulin®, then better post-prandial glucose control will be
said to have been achieved by ViajectTM.

          “Warrant” shall mean this Warrant and any subsequent Warrant issued pursuant to the
terms of this Warrant.

          “Warrant Register” has the meaning ascribed to such term in Subsection 9(c).

     2. Exercise of Warrant.

          (a) Exercise. This Warrant may be exercised, in whole or in part, at any time or from
time to time during the period beginning on the date hereof and ending on the Expiration Date, by
surrendering to the Company at its principal office this Warrant, with the form of Election to
Purchase Shares (the “Election to Purchase Shares”) attached hereto as Exhibit A duly
executed by the Holder and accompanied by payment of the Purchase Price for the number of shares of
Common Stock specified in such form.

          (b) Delivery of Shares; Payment of Purchase Price. As soon as practicable after
surrender of this Warrant and receipt of payment, the Company shall promptly issue and deliver to
the Holder a certificate or certificates for the number of shares of Common Stock set forth in the
Election to Purchase Shares, in such name or names as may be designated by such Holder, along with
a check for the amount of cash to be paid in lieu of issuance of fractional shares, if any. Payment
of the Purchase Price may be made as follows (or by any combination of the following): (i) in
United States currency by cash, delivery of a certified check, bank draft or postal or express
money order payable to the order of the Company, or by wire transfer of immediately available funds
to the Company in accordance with wire transfer instructions furnished by the Company to the Holder
(ii) by surrender of a number of shares of Common Stock held by the Holder equal to the quotient
obtained by dividing (A) the aggregate Purchase Price payable with respect to the portion of this
Warrant then being exercised by (B) the Current Market Price per share of Common Stock on the
Exercise Date, or (iii) by cancellation of any portion of this Warrant with respect to the number
of shares of Common Stock equal to the quotient obtained by dividing (A) the aggregate Purchase
Price payable with respect to the portion of this Warrant then being exercised by (B) the
difference between (1) Current Market Price per share of Common Stock on the Exercise Date, and (2)
the Purchase Price per share of Common Stock.

          (c) Partial Exercise. If this Warrant is exercised for less than all of the shares of
Common Stock purchasable under this Warrant, the Company shall cancel this Warrant upon surrender
hereof and shall execute and deliver to the Holder a new Warrant of like tenor for the balance of
the shares of Common Stock purchasable hereunder.

          (d) When Exercise Effective. The exercise of this Warrant shall be been
effective immediately prior to the close of business on the Business Day on which this Warrant is
surrendered to and the Purchase Price is received by the Company as provided in this

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Section 2 (the
“Exercise Date”) and the Person in whose name any certificate for shares of Common Stock shall be
issuable upon such exercise, as provided in Subsection 2(b), shall be deemed to be the record
holder of such shares of Common Stock for all purposes on the Exercise Date.

          (e) Issued Warrant Shares Fully Paid, Nonassessable. The Company shall take all
actions necessary to ensure that following exercise of this Warrant in accordance with the
provisions of this Section 2, the Issued Warrant Shares issued hereunder shall, without
further action by the Holder, be fully paid and nonassessable.

          (f) Continued Validity. A Holder of shares of Common Stock issued upon the exercise
of this Warrant, in whole or in part, shall continue to be entitled to all of the rights and
subject to all of the obligations set forth in Section 9.

     3. Adjustment of Purchase Price and Number of Shares. The Purchase Price, Dilution
Price and the number of shares of Common Stock issuable upon exercise of this Warrant shall be
adjusted from time to time in the following manner upon the occurrence of the following events:

          (a) Dividend, Subdivision, Combination or Reclassification of Common Stock. If the
Company shall, at any time or from time to time, (i) declare a dividend on the Common Stock payable
in shares of its capital stock (including Common Stock), (ii) subdivide the outstanding Common
Stock into a larger number of shares of Common Stock, (iii) combine the outstanding Common Stock
into a smaller number of shares of its Common Stock, or (iv) issue any shares of its capital stock
in a reclassification of the Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation), then in each
such case, the Dilution Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date shall be proportionately adjusted so that the Holder
of any Warrant exercised after such date shall be entitled to receive, upon payment of the same
aggregate amount as would have been payable before such date, the aggregate number and kind of
shares of capital stock which, if such Warrant had been exercised immediately prior to such date,
such Holder would have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. Any such adjustment shall become effective
immediately on the payment date of such dividend or the effective date of such subdivision,
combination or reclassification. Such adjustment shall be made successively whenever any event
listed above shall occur. If a dividend is declared and such dividend is not paid, the Dilution
Price shall again be adjusted to be the Dilution Price in effect immediately prior to such record
date (giving effect to all adjustments that otherwise would be required to be made pursuant to this
Section 3 from and after such record date).

          (b) Issuance of Rights to Purchase Common Stock Below Dilution Price. If the Company
shall, at any time or from time to time after the date hereof, fix a record date for the issuance
of rights, options or warrants to all holders of Common Stock entitling them to subscribe for or
purchase Common Stock, or securities convertible into or exchangeable for Common Stock at a price
per share of Common Stock or having a conversion price per share of Common Stock if a security is
convertible into or exchangeable for

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Common Stock (determined in either such case by dividing (x)
the total consideration paid and/or payable to the Company upon exercise, conversion or exchange of
such rights, options, warrants or other securities convertible into or exchangeable for Common
Stock by (y) the total number of shares of Common Stock covered by such rights, options, warrants
or other securities convertible into or exchangeable for Common Stock) which is lower than the
Dilution Price, then the Dilution Price shall be reduced to the price per share of the Common Stock
to be so offered (or the initial conversion price of the convertible
securities to be so offered) as determined under clauses (x) and (y) above, provided,
however, if either a Successful Superiority Trial has been completed or the issuance of the
securities contemplated in this section is being effected at least six months after the completion
of a Qualified Subsequent Investment, then (I) the Dilution Price in effect immediately prior to
the issuance of such securities shall first be reduced to the price which is the greater of (A) the
price per share of such Common Stock (as determined pursuant to clauses (x) and (y)) and (B) the
price computed by dividing forty million by the number of shares of Common Stock outstanding
immediately prior to the issuance of the securities (after giving effect to the full exercise,
conversion or exchange, as applicable of such securities and all other securities of the Company
outstanding) (the price so determined under this clause (B), the “Base Dilution Price”), and (II)
if the Dilution Price is reduced pursuant to clause ((I)(B), the Dilution Price shall be further
reduced so that it shall equal the price determined by multiplying Base Dilution Price by a
fraction the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of the securities contemplated in this section plus the number of
shares of Common Stock which the aggregate consideration received for the issuance of the
securities would purchase at the Base Dilution Price, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after the issuance of the securities
(after giving effect to the full exercise, conversion or exchange, as applicable, of such
securities and all other securities of the Company outstanding; provided, further,
however, that such adjustment shall be made only if such adjustment results in an Dilution
Price which is lower than the Dilution Price in effect immediately prior to such record date. In
case such price for subscription or purchase may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be determined in good
faith by the Board. Any such adjustment shall become effective immediately after the record date
for such rights or warrants. Such adjustment shall be made successively whenever such a record date
is fixed. If such rights or warrants are not issued, or expire or terminate without the exercise
of such rights or warrants and no securities are issued pursuant thereto, the Dilution Price shall
be adjusted to the Dilution Price that otherwise would be in effect but for the fact that such
record date had been fixed.

          (c) Certain Distributions. If the Company shall, at any time or from time to time, fix
a record date for the distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the continuing
corporation) of evidences of indebtedness, assets or other property (other than regularly scheduled
cash dividends or cash distributions payable out of consolidated earnings or

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earned surplus or
dividends payable in capital stock for which adjustment is made under Subsection 3(a)) or
subscription rights, options or warrants (excluding those referred to in Subsection 3(b)), then the
number and kind of shares of capital stock or other property issuable on such date shall be
proportionately adjusted so that the Holder of any Warrant exercised after such date shall be
entitled to receive, upon payment of the same aggregate amount as would have been payable before
such date, the aggregate number and kind of shares of capital stock and other property which, if
such Warrant had been exercised immediately prior to such record date, such Holder would have owned
upon such exercise and been entitled to receive by virtue of such distribution. Any such
adjustment shall become effective immediately after the record date for such distribution. Such
adjustments shall be made successively whenever such a record date is
fixed. In the event that such distribution is not so made, the number of shares of Common
Stock or other property which may be received upon exercise of this Warrant shall be adjusted to
the number in effect immediately prior to such record date (giving effect to all adjustments that
otherwise would be required to be made pursuant to this Section 3 from and after such record date).

          (d) Issuance of Common Stock Below Dilution Price.

               (i) If the Company shall, at any time and from time to time, after the date hereof, directly
or indirectly, sell or issue shares of Common Stock (regardless of whether originally issued or
from the Company’s treasury), or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common Stock) at a price per
share of Common Stock (determined, in the case of rights, options, warrants or convertible or
exchangeable securities (collectively, “Securities”), by dividing (x) the total consideration
received or receivable by the Company in consideration of the sale or issuance of such Securities,
plus the total consideration payable to the Company upon exercise or conversion or exchange
thereof, by (y) the total number of shares of Common Stock covered by such Securities) which is
lower than the Dilution Price in effect immediately prior to such sale or issuance, then, subject
to clause 3(d)(ii), the Dilution Price shall be reduced to the consideration received (in the case
of Securities, determined as provided herein) per share of Common Stock with respect to such sale
or issuance; provided, however, if either a Successful Superiority Trial has been
completed or the issuance of the securities contemplated in this section is being effected at least
six months after the completion of a Qualified Subsequent Investment, then (I) the Dilution Price
in effect immediately prior to the issuance of such Securities shall first be reduced to the price
which is the greater of (A) the price per share of such Common Stock (as determined pursuant to
clauses (x) and (y)) and (B) the Base Dilution Price and (II) if the Dilution Price is reduced
pursuant to clause ((I)(B), the Dilution Price shall be further reduced so that it shall equal the
price determined by multiplying Base Dilution Price by a fraction the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to the issuance of the
Securities contemplated in this section plus the number of shares of Common Stock which the
aggregate consideration received for the issuance of the Securities would purchase at the Base
Dilution Price, and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after the issuance of the Securities (after giving

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effect to the full
exercise, conversion or exchange, as applicable, of such securities and all other securities of the
Company outstanding; provided, further, however that such adjustment shall be made only if such
adjustment results in an Dilution Price which is lower than the Dilution Price in effect
immediately prior to taking such action. Such adjustment shall be made successively whenever such
sale or issuance is made. For the purposes of such adjustments, the shares of Common Stock which
the holder of any such Securities shall be entitled to subscribe for or purchase shall be deemed to
be issued and outstanding as of the date of such sale or issuance of such Securities and the
consideration “received” by the Company therefor shall be deemed to be the consideration actually
received or receivable by the Company (plus any underwriting discounts or commissions in connection
therewith) for such Securities, plus the consideration stated in such Securities to be payable to
the Company for the shares of Common Stock covered thereby. If the Company shall
sell or issue shares of Common Stock for a consideration consisting, in whole or in part, of
property other than cash or its equivalent, then in determining the “price per share of Common
Stock” and the “consideration” received or receivable by or payable to the Company for purposes of
the first sentence and the immediately preceding sentence of this Subsection 3(d)(i), the fair
value of such property shall be determined in good faith by the Board. Except as provided below,
the determination of whether any adjustment is required under this Subsection 3(d)(i) by reason of
the sale or issuance of Securities and the amount of such adjustment, if any, shall be made only at
the time of such issuance or sale and not at the subsequent time of issuance of shares of Common
Stock upon the exercise, conversion or exchange of such Securities.

               (ii) No adjustment shall be made to the Dilution Price pursuant to clause 3(d)(i) in
connection with the issuance of (A) shares issued in any of the transactions described in
Subsections 3(a), (b) and (c) hereof; (B) shares issued upon exercise of this Warrant; (C) shares
issued upon conversion of the Series A Convertible Preferred Stock of the Company, or the Series B
Convertible Preferred Stock (the “Convertible Preferred Stock”); or (D) options to purchase an
aggregate of 1,248,500 additional shares of Common Stock pursuant to any stock option or stock plan
or arrangement of the Company in effect on the date hereof, as amended or supplemented after the
date hereof, granted at an exercise price of not less than the Current Market Price of Common Stock
at the time of grant.

               (iii) Notwithstanding any provision in this Section 3 to the contrary and without limitation
to any other provision contained in this Section 3, in the event any securities of the Company
(other than this Warrant or the Convertible Preferred Stock, including, without limitation, those
securities set forth as exceptions in Subsection 3(d)(ii) (for purposes of this Subsection,
collectively, the “Subject Securities”) are amended or otherwise modified by operation of its terms
or otherwise (including, without limitation, by operation of such Subject Securities’ anti-dilution
provisions, other than those anti-dilution provisions contained within the Subject Securities that
are substantially similar to the provisions of Section 3(a) hereof) in any manner whatsoever that
results in (i) the reduction of the exercise, conversion or exchange price of such Subject
Securities payable upon the exercise for, or conversion or exchange into, Common Stock or other
securities exercisable for, or convertible or exchangeable into, Common

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Stock and/or (ii) such
Subject Securities becoming exercisable for, or convertible or exchangeable into (A) more shares or
dollar amount of such Subject Securities which are, in turn exercisable for, or convertible or
exchangeable into, Common Stock, or (B) more shares of Common Stock, then such amendment or
modification shall be treated for purposes of Section 3 as if the Subject Securities which have
been amended or modified have been terminated and new securities have been issued with the amended
or modified terms. The Company shall make all necessary adjustments (including successive
adjustments if required) to the Dilution Price in accordance with Section 3. Upon the expiration
or termination of the right to exercise, convert or exchange any Securities without any shares of
Common Stock having been issued pursuant to such right, any adjustment to the Dilution Price which
was made upon the issuance of such Securities shall be adjusted to the Dilution Price that
otherwise would be in effect but for the fact of the issuance of such Securities.

          (e) Determination of Current Market Price. For the purpose of any computation under
Subsections (b), (c) or (d) of this Section 3 or any other provision of this Warrant, the Current
Market Price per share of Common Stock on any date shall be deemed to be the average of the daily
Closing Prices per share of Common Stock for the 5 consecutive trading days commencing 7 trading
days before such date. If on any such date the shares of Common Stock are not listed or admitted
for trading on any national securities exchange or quoted by NASDAQ or a similar service, then the
Company, on the one hand, and the Holder, on the other hand, shall each promptly appoint as an
appraiser an individual who shall be a member of a nationally recognized investment banking firm.
Each appraiser shall be instructed to, within 30 days of appointment, determine the Current Market
Price per share of Common Stock which shall be deemed to be equal to the fair market value per
share of Common Stock as of such date. If the two appraisers are unable to agree on the Current
Market Price per share of Common Stock within such 30 day period, then the two appraisers, within
10 days after the end of such 30 day period shall jointly select a third appraiser. The third
appraiser shall, within 30 days of its appointment, determine, in good faith, the Current Market
Price per share of Common Stock and such determination shall be controlling. If any party fails to
appoint an appraiser or if one of the two initial appraisers fails after appointment to submit its
appraisal within the required period, the appraisal submitted by the remaining appraiser shall be
controlling. The cost of the foregoing appraisals shall be shared one-half by the Company and
one-half by the Holder, provided, however, in the event a third appraiser is
utilized and one of the two initial appraisals (but not the other initial appraisal) is greater
than or less than the appraisal by such third appraiser by 10% or more, then the cost of all of the
foregoing appraisals shall be borne by the party who appointed the appraiser who made such initial
appraisal.

          (f) Adjustment to Purchase Price. Upon each adjustment to the Dilution Price pursuant
to Section 3, the Purchase Price shall be adjusted by multiplying the Purchase Price in effect
immediately prior to such adjustment by a fraction, the numerator of which shall be the Dilution
Price as so adjusted and the denominator of which shall be the Dilution Price in effect immediately
prior to such adjustment.

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          (g) Adjustment of Number of Shares Issuable Upon Exercise. Upon each adjustment of the
Dilution Price and the Purchase Price as a result of the calculations made in Subsections 3(a), (b)
or (d), this Warrant shall thereafter evidence the right to receive, at the adjusted Purchase
Price, that number of shares of Common Stock (calculated to the nearest one-hundredth) obtained by
dividing (x) the product of the aggregate number of shares of Common Stock covered by this Warrant
immediately prior to such adjustment and the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price by (y) the Purchase Price in effect immediately after such
adjustment of the Purchase Price.

          (h) De Minimis Adjustments. No adjustment shall be made under this Section 3 if the
amount of such adjustment would result in a change in the Dilution Price per share of less than
$0.05, but in such case any adjustment that would otherwise be required to be made shall be carried
forward and shall be made at the time of and together with the next subsequent adjustment, which
together with any adjustment so carried forward, would result in a change in the Dilution Price of
$0.05 or more per share. Notwithstanding the provisions of the first
sentence of this Subsection 3(h), any adjustment postponed pursuant to this Subsection 3(h)
shall be made no later than the earlier of (i) three years from the date of the transaction that
would, but for the provisions of the first sentence of this Section 3(h), have required such
adjustment, (ii) an Exercise Date or (iii) the Expiration Date.

          (i) Adjustments to Other Shares. In the event that at any time, as a result of an
adjustment made pursuant to Subsection 3(a), the Holder shall become entitled to receive, upon
exercise of this Warrant, any shares of capital stock or other securities of the Company other than
shares of Common Stock, the number of such other shares or securities so receivable upon exercise
of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares of Common Stock contained in
Subsections 3(a), (b), (c) and (d), inclusive, and the provisions of Sections 2, 5, 6 and 7 with
respect to the shares of Common Stock shall apply on like terms to any such other shares or
securities.

          (j) Reorganization, Reclassification, Merger and Sale of Assets. If there occurs any
capital reorganization or any reclassification of the Common Stock of the Company, the
consolidation or merger of the Company with or into another Person (other than a merger or
consolidation of the Company in which the Company is the continuing corporation and which does not
result in any reclassification or change of outstanding shares of its Common Stock) or the sale or
conveyance of all or substantially all of the assets of the Company to another Person, then
the Holder will thereafter be entitled to receive, upon the exercise of this Warrant in accordance
with the terms hereof, the same kind and amounts of securities (including shares of stock) or other
assets, or both, which were issuable or distributable to the holders of outstanding Common Stock of
the Company upon such reorganization, reclassification, consolidation, merger, sale or conveyance,
in respect of that number of shares of Common Stock then deliverable upon the exercise of this
Warrant if this Warrant had been exercised immediately prior to such reorganization,
reclassification, consolidation, merger, sale or conveyance; and, in any such case, appropriate
adjustments (as determined in good faith by the Board of Directors of

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the Company) shall be made to
assure that the provisions hereof (including, without limitation, provisions with respect to
changes in, and other adjustments of, the Purchase Price and the Dilution Price) shall thereafter
be applicable, as nearly as reasonably may be practicable, in relation to any securities or other
assets thereafter deliverable upon exercise of this Warrant.

     4. Certificate as to Adjustments. Whenever the Purchase Price, the Dilution Price or
the number of shares of Common Stock issuable, or the securities or other property deliverable,
upon the exercise of this Warrant shall be adjusted pursuant to the provisions hereof, the Company
shall promptly give written notice thereof to the Holder, in accordance with Section 13, in the
form of a certificate signed by the Chairman of the Board, President or one of the Vice Presidents
of the Company, and by the Chief Financial Officer, Treasurer or one of the Assistant Treasurers of
the Company, stating the adjusted Purchase Price and Dilution Price, the number of shares of Common
Stock issuable, or the securities or other property deliverable, upon exercise of the Warrant and
setting forth in reasonable detail the method of calculation and the facts requiring such
adjustment and upon which such calculation is based. Each adjustment shall remain in effect until a
subsequent adjustment is required.

     5. Fractional Shares. Notwithstanding an adjustment pursuant to Section 3(g) in the
number of shares of Common Stock covered by this Warrant or any other provision of this Warrant,
the Company shall not be required to issue fractions of shares upon exercise of this Warrant or to
distribute certificates which evidence fractional shares. In lieu of fractional shares, the Company
may make payment to the Holder, at the time of exercise of this Warrant as herein provided, of an
amount in cash equal to such fraction multiplied by the greater of the Current Market Price of a
share of Common Stock on the Exercise Date and the Dilution Price.

     6. Notice of Proposed Actions. In case the Company shall propose at any time or from
time to time (a) to declare or pay any dividend payable in stock of any class to the holders of
Common Stock or to make any other distribution to the holders of Common Stock (other than a
regularly scheduled cash dividend), (b) to offer to the holders of Common Stock rights or warrants
to subscribe for or to purchase any additional shares of Common Stock or shares of stock of any
class or any other securities, rights, warrants or options, (c) to effect any reclassification of
its Common Stock, (d) to effect any consolidation, merger or sale, transfer or other disposition of
all or substantially all of the property, assets or business of the Company which would, if
consummated, adjust the Purchase Price, the Dilution Price or the securities issuable upon exercise
of the Warrants, (e) to effect the liquidation, dissolution or winding up of the Company, or (f) to
take any other action that would require a vote of the Company’s stockholders, then, in each such
case, the Company shall give to the Holder, in accordance with Section 13, a written notice of such
proposed action, which shall specify (i) the record date for the purposes of such stock dividend,
distribution of rights or warrants or vote of the stockholders of the Company, or if a record is
not to be taken, the date as of which the holders of shares of Common Stock of record to be
entitled to such dividend, distribution of rights or warrants, or vote is to be determined, or (ii)
the date on which such reclassification, consolidation, merger, sale, transfer, disposition,
liquidation, dissolution or winding up is expected to become effective, and such notice shall be so
given as promptly as possible but in any event at least ten (10)

11

 

Business Days prior to the
applicable record, determination or effective date specified in such notice.

     7. No Dilution or Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against dilution (other
than the dilutive events covered in Section 3 herein) or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase the par value of any shares of stock
receivable on the exercise of this Warrant above the amount payable therefor on such exercise, (b)
will at all times reserve and keep available the maximum number of its authorized shares of Common
Stock, free from all preemptive rights therein, which will be sufficient to permit the full
exercise of this Warrant, and (c) will take all such action as may be necessary or appropriate in
order that all shares of Common Stock as may be issued pursuant to the exercise of this Warrant
will, upon issuance, be duly and validly issued, fully paid and nonassessable, and free from all
taxes, liens and charges as to the holders of the Warrant exercised with respect to the issue
thereof.

     8. Replacement of Warrants. On receipt by the Company of an affidavit of an authorized
representative of the Holder stating the circumstances of the loss, theft, destruction or
mutilation of this Warrant (and in the case of any such mutilation, on surrender and cancellation
of such Warrant), the Company at its expense will promptly execute and deliver, in lieu thereof, a
new Warrant of like tenor which shall be exercisable for a like number of shares of Common Stock.
If required by the Company, such Holder must provide an indemnity bond or other indemnity
sufficient in the judgment of the Company to protect the Company from any loss which it may suffer
if a lost, stolen or destroyed Warrant is replaced.

     9. Restrictions on Transfer.

          (a) Subject to the provisions of this Section 9, this Warrant may be transferred or assigned,
in whole or in part, by the Holder at any time, and from time to time. The term “Holder” as used
herein shall also include any transferee of this Warrant whose name has been recorded by the
Company in the Warrant Register (as hereinafter defined). Each transferee of the Warrant or the
Common Stock issuable upon the exercise of the Warrant acknowledges that the Warrant or the Common
Stock issuable upon the exercise of the Warrant has not been registered under the Securities Act
and may be transferred only pursuant to an effective registration under the Securities Act or
pursuant to an applicable exemption from the registration requirements of the Securities Act.

          (b) With respect to a transfer that should occur prior to the time that the Warrant or the
Common Stock issuable upon the exercise thereof is registered under the Securities Act, such Holder
shall request an opinion of counsel (which shall be rendered by counsel reasonably

12

 

acceptable to
the Company) that the proposed transfer may be effected without registration or qualification under
any Federal or state securities or blue sky law. Counsel shall, as promptly as practicable, notify
the Company and the Holder of such opinion and of the terms and conditions, if any, to be observed
in such transfer, whereupon the Holder shall be entitled to transfer this Warrant or such shares of
Common Stock (or portion thereof), subject to any other provisions and limitations of this Warrant.
In the event this Warrant shall be exercised as an incident to such transfer, such exercise shall
relate back and for all purposes of this Warrant be deemed to have occurred as of the date of such
notice regardless of delays incurred by reason of the provisions of this Section 9 which may result
in the actual exercise on any later date.

          (c) The Company shall maintain a register (the “Warrant Register”) in its principal office for
the purpose of registering the Warrant and any transfer thereof, which register shall reflect and
identify, at all times, the ownership of any interest in the Warrant. Upon the issuance of this
Warrant, the Company shall record the name of the initial purchaser of this Warrant in the Warrant
Register as the first Holder. Upon surrender for registration of transfer or exchange of this
Warrant together with a properly executed Form of Assignment attached hereto as Exhibit B
at the principal office of the Company, the Company shall, at its expense, execute and deliver one
or more new Warrants of like tenor which shall be exercisable for a like aggregate number of
shares of Common Stock, registered in the name of the Holder or a transferee or transferees.

          (d) Intentionally omitted.

     10. No Rights or Liability as a Stockholder. This Warrant does not entitle the Holder
hereof to any voting rights or other rights as a stockholder of the Company. No provisions hereof,
in the absence of affirmative action by the Holder hereof to purchase Common Stock, and no
enumeration herein of the rights or privileges of the Holder shall give rise to any liability of
such Holder as a stockholder of the Company.

     11. Charges, Taxes and Expenses. Issuance of certificates for shares of Common Stock
upon the exercise of this Warrant shall be made without charge to the Holder hereof for any issue
or transfer tax, or other incidental expense, in respect of the issuance or delivery of such
certificates or the securities represented thereby, all of which taxes and expenses shall be paid
by the Company.

     12. Amendment or Waiver. Subject to the terms of the Section 7.5 of the Purchase
Agreement, this Warrant and any term hereof may be amended, waived, discharged or terminated only
by and with the written consent of the Company and the Holder.

     13. Notices. Any notice or other communication (or delivery) required or permitted
hereunder shall be made in writing and shall be by registered mail, return receipt requested,
telecopier, courier service or personal delivery to the Company at its principal office as
specified in Section 7.3 of the Purchase Agreement and to the Holder at its address as it appears
in the Warrant Register. All such notices and communications (and deliveries) shall be deemed to
have

13

 

been duly given: when delivered by hand, if personally delivered; when delivered by courier,
if delivered by commercial overnight courier service; five Business Days after being deposited in
the mail, postage prepaid, if mailed; and when receipt is acknowledged, if telecopied.

     14. Certain Remedies. The Holder shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Warrant and to enforce specifically the terms and
provisions of this Warrant in any court of the United States or any state thereof having
jurisdiction, this being in addition to any other remedy to which such Holder may be entitled at
law or in equity.

     15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED IN ACCORDANCE WITH,
AND ENFORCED UNDER, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS OR INSTRUMENTS
ENTERED INTO AND PERFORMED ENTIRELY WITHIN SUCH STATE.

     16. Headings. The headings in this Warrant are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.

14

 

	 	 	 	 	 
	 	 	BIODEL INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name: Solomon S. Steiner
	 

	 	 	 	Title: Chairman and President

 

 

	 	 	 
	 

	 	Exhibit A to Common
	 

	 	Stock Purchase Warrant

FORM OF

ELECTION TO PURCHASE SHARES

     The
undersigned hereby irrevocably elects to exercise the Warrant to purchase                      shares of
Common Stock, par value $0.01per share (“Common Stock”), of Biodel Inc. (the “Company”) and hereby
[makes payment of
$                     therefor] [or] [makes payment therefore by surrendering pursuant to
Section 2(b)(iii)
                     shares of Common Stock of the Company] [or] [makes payment therefor by
cancellation pursuant to Section 2(b)(iv) of a portion of the
Warrant with respect to                      shares
of Common Stock]. The undersigned hereby requests that certificates for such shares be
issued and delivered as follows:

	 	 	 
	ISSUE TO:
	 	 
	 

	 	 

(NAME)

 

(ADDRESS, INCLUDING ZIP CODE)

 

(SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER)

	 	 	 
	DELIVER TO:
	 	 
	 

	 	 

(NAME)

 

(ADDRESS, INCLUDING ZIP CODE)

          If the number of shares of Common Stock purchased hereby is less than the number of shares of
Common Stock covered by the Warrant, the undersigned requests that a new Warrant representing the
number of shares of Common Stock not purchased be issued and delivered as follows:

	 	 	 
	ISSUE TO:
	 	 
	 

	 	 

(NAME OF HOLDER)

 

(ADDRESS, INCLUDING ZIP CODE)

	 	 	 
	DELIVER TO:
	 	 
	 

	 	 

(NAME OF HOLDER)

 

(ADDRESS, INCLUDING ZIP CODE)

	 	 	 	 	 
	Dated:                                        	 	[NAME OF HOLDER]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

 

			
	1	 	Name of Holder must conform in all respects to name of Holder as specified on the face
of the Warrant.

 

 

	 	 	 
	 

	 	Exhibit B to Common
	 

	 	Stock Purchase Warrant

FORM OF ASSIGNMENT

          FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto the Assignee
named below all of the rights of the undersigned to purchase Common Stock, par value $0.01 per
share (“Common Stock”), of BIODEL INC. represented by the Warrant, with respect to the number of
shares of Common Stock set forth below:

Name of Assignee            Address            No. of Shares

and does
hereby irrevocably constitute and appoint                                                              Attorney
to make
such transfer on the books of BIODEL, INC. maintained for that purpose, with full power of
substitution in the premises.

	 	 	 	 	 
	Dated:                                        	 	[NAME OF HOLDER1]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

 

			
	1	 	Name of Holder must conform in all respects to name of Holder as specified on the face of the
Warrant.EX-4.5

 

Exhibit 4.5

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND
UNDER APPLICABLE STATE SECURITIES LAWS. THE ISSUER MAY REQUIRE AN OPINION OF COUNSEL TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS.

WARRANT TO PURCHASE

SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK

OF

BIODEL INC.

Expires July 13, 2012

	 	 	 
	 
	 	 
	No.:  W-

	 	Number of Shares:
	Date of Issuance: [     ], 2005
	 	 
	 
	 	 

FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the undersigned, Biodel Inc.,
a Delaware corporation (together with its successors and assigns, the “Issuer”), hereby certifies
that [                    ] and its registered assigns is entitled to subscribe for and purchase,
during the period specified in this Warrant, up to [                    ] shares (subject to adjustment as
hereinafter provided) of the duly authorized, validly issued, fully paid and
non-assessable Series A Convertible Preferred Stock of the Issuer (the “Preferred Stock”), or if
all of the outstanding shares of Preferred Stock have been converted in accordance with its terms
into Common Stock of the Issuer (the “Common Stock”), into such number of shares of Common Stock
as the Preferred Stock would have been convertible into (the Preferred Stock or Common Stock into
which this Warrant is exercisable for, the “Warrant Stock”), at an exercise price per share equal
to the Warrant Price then in effect, subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. Capitalized terms used in this Warrant and not otherwise defined
herein shall have the respective meanings specified in Section 7 hereof.

 

 

     1. Term. The right to subscribe for and purchase shares of Warrant Stock represented
hereby shall commence on the date of issuance of this Warrant and shall expire at 5:00 p.m.,
eastern time, on the seventh anniversary of the date of issuance (such period being the
"Term").

2. Method of Exercise Payment; Issuance of New Warrant; Transfer and Exchange.

     (a) Time of Exercise. The purchase rights represented by this Warrant may be exercised
in whole or in part at any time and from time to time during the Term.

     (b) Method of Exercise. The Holder hereof may exercise this Warrant, in whole or in
part, by the surrender of this Warrant (with the exercise form attached hereto duly executed) at
the principal office of the Issuer, together with the payment to the Issuer of an amount of
consideration therefor equal to the Warrant Price in effect on the date of such exercise multiplied
by the number of shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder’s election (i) by certified or official bank check or by wire
transfer to an account designated by the Issuer (ii) by “cashless exercise” by surrender to the
Issuer for cancellation of a portion of this Warrant representing that number of unissued shares of
Warrant Stock which is equal to the quotient obtained by dividing (A) the product obtained by
multiplying the Warrant Price by the number of shares of Warrant Stock being purchased upon such
exercise by (B) the Per Share Market Value as of the date of such exercise, or (iii) by a
combination of the foregoing methods of payment selected by the Holder of this Warrant. In any case
where the consideration payable upon such exercise is being paid in whole or in part pursuant to
the provisions of clause (ii) of this subsection (b), such exercise shall be accompanied by written
notice from the Holder of this Warrant specifying the manner of payment thereof and containing a
calculation showing the number of shares of Warrant Stock with respect to which rights are being
surrendered thereunder and the net number of shares to be issued after giving effect to such
surrender. Notwithstanding anything to the contrary, in the event that the Per Share Market Value
on the last day this Warrant is exercisable is greater than the Warrant Price then in effect,
without any further action this Warrant shall be automatically exercised on such date by “cashless
exercise”.

     (c) Issuance of Stock Certificates. In the event of any exercise of the rights
represented by this Warrant in accordance with and subject to the terms and conditions hereof, (i)
certificates for the shares of Warrant Stock so purchased shall be dated the date of such exercise
and delivered to the Holder hereof within a reasonable time, not exceeding three (3) Trading Days
after such exercise, and the Holder hereof shall be deemed for all purposes to be the Holder of the
shares of Warrant Stock so purchased as of the date of such exercise, and (ii) unless this Warrant
has expired, a new Warrant representing the number of shares of Warrant Stock, if any, with respect
to which this Warrant shall not then have been exercised (less any amount thereof which shall have
been canceled in payment or partial payment of the Warrant Price as hereinabove provided) shall
also be issued to the Holder hereof at the Issuer’s expense within such time.

2

 

     (d) Transferability of Warrant. Subject to Section 2(e), this Warrant may be
transferred, in whole or in part, by a Holder without the consent of the Issuer. If transferred
pursuant to this paragraph and subject to the provisions of subsection (e) of this Section 2, this
Warrant may be transferred on the books of the Issuer by the Holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant at the principal office of the Issuer, properly
endorsed (by the Holder executing an assignment in the form attached hereto) and upon payment of
any necessary transfer tax or other governmental charge imposed upon such transfer. This Warrant is
exchangeable at the principal office of the issuer for Warrants for the purchase of the same
aggregate number of shares of Warrant Stock, each new Warrant to represent the right to purchase
such number of shares of Warrant Stock as the Holder hereof shall designate at the time of such
exchange. All Warrants issued on transfers or exchanges shall be dated the Original Issue Date and
shall be identical with this Warrant except as to the number of shares of Warrant Stock issuable
pursuant hereto.

     (e) Compliance with Securities Laws.

     (i) The Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant or the
shares of Warrant Stock to be issued upon exercise hereof are being acquired solely for the
Holder’s own account and not as a nominee for any other Person, and for investment and that the
Holder will not offer, sell or otherwise dispose of this Warrant or any shares of Warrant Stock to
be issued upon exercise hereof except pursuant to an effective registration statement or an
exemption from registration under the Securities Act and any applicable state securities laws.

     (ii) Except as provided in paragraph (iii) below, this Warrant and all certificates
representing shares of Warrant Stock issued upon exercise hereof shall be stamped or imprinted with
a legend in substantially the following form:

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED EXCEPT AS PERMITTED UNDER
THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS. THE
ISSUER MAY REQUIRE AN OPINION OF COUNSEL TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS.

3

 

     (iii) The restrictions imposed by this subsection (e) upon the transfer of this Warrant or the
shares of Warrant Stock to be purchased upon exercise hereof shall terminate (A) when such
securities shall have been resold pursuant to an effective registration statement under the
Securities Act, (B) upon the Issuer’s receipt of an opinion of counsel, which opinion and counsel
shall be reasonably satisfactory to the Issuer, addressed to the Issuer to the effect that such
restrictions are no longer required to ensure compliance with the Securities Act and state
securities laws or (C) upon the Issuer’s receipt of other evidence reasonably satisfactory to the
Issuer that such registration and qualification under the Securities Act and state securities laws
are not required. Whenever such restrictions shall cease and terminate as to any such securities,
the Holder thereof shall be entitled to receive from the Issuer (or its transfer agent and
registrar), without expense (other than applicable transfer taxes, if any), new Warrants (or, in
the case of shares of Warrant Stock, new stock certificates) of like tenor not bearing the
applicable legend required by paragraph (ii) above relating to the Securities Act and state
securities laws.

     (f) Continuing Rights of Holder. The Issuer will at the time of or at any time after
each exercise of this Warrant, upon the request of the Holder hereof, acknowledge in writing the
extent, if any, of its continuing obligation to afford to such Holder all rights to which such
Holder shall continue to be entitled after such exercise in accordance with the terms of this
Warrant, provided that if any such Holder shall fail to make any such request the failure
shall not affect the continuing obligation of the Issuer to afford such rights to such Holder.

     3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

     (a) Stock Fully Paid. The Issuer represents, warrants, covenants and agrees that all
shares of Warrant Stock which may be issued upon the exercise of this Warrant or otherwise
hereunder will, upon issuance, be duly authorized, validly issued, fully paid and non-assessable
and free from all taxes, liens and charges created by or through Issuer. The Issuer further
covenants and agrees that during the period within which this Warrant may he exercised the Issuer
will at all times have authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Preferred Stock, or in the event that all of the
outstanding shares of Preferred Stock have been converted into Common Stock, a sufficient number
of shares of Common Stock, to provide for the exercise of this Warrant.

     (b) Reservation. If any shares of Warrant Stock required to be reserved for issuance
upon exercise of this Warrant or as otherwise provided hereunder require registration or
qualification with any governmental authority under any federal or state law before such shares
may be so issued, the Issuer will in good faith use its commercially reasonable efforts
expeditiously at its expense to cause such shares to be duly registered or qualified. If the
Issuer shall list any shares of Common Stock on any securities exchange or market it will, at its
expense, list thereon, maintain and increase when necessary such listing of all shares of Common
Stock from time to time issued upon exercise of this Warrant or as otherwise provided hereunder,
and, to the extent permissible under the applicable securities exchange rules, all unissued shares
of Common Stock which are at any time issuable

4

 

hereunder, so long as any shares of Common Stock shall be so listed. The Issuer will also so
list on each securities exchange or market, and will maintain such listing of, any other
securities which the Holder of this Warrant shall be entitled to receive upon the exercise of this
Warrant if at the time any securities of the same class shall be listed on such securities
exchange or market by the Issuer.

     (c) Covenants. The Issuer shall not by any action including, without limitation,
amending the Certificate of Incorporation or the by-laws of the Issuer, or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other action, avoid or seek to avoid the observance or performance of any of the terms of
this Warrant, but will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to protect the rights of the
Holder hereof against dilution (to the extent specifically provided herein) or impairment. Without
limiting the generality of the foregoing, the Issuer will (i) not permit the par value, if any, of
its Warrant Stock to exceed the then effective Warrant Price, (ii) not amend or modify any
provision of the Certificate of Incorporation or by-laws of the Issuer in any manner that would
adversely affect in any way the powers, preferences or relative participating, optional or other
special rights of the Warrant Stock or which would adversely affect the rights of the Holders of
the Warrants, (iii) take all such action as may be reasonably necessary in order that the Issuer
may validly and legally issue fully paid and nonassessable shares of Warrant Stock, free and clear
of any liens, claims, encumbrances and restrictions (other than as provided herein) upon the
exercise of this Warrant, and (iv) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this Warrant.

     (d) Loss, Theft. Destruction of Warrants. Upon receipt of evidence satisfactory to the
Issuer of the ownership of and the loss, theft, destruction or mutilation of any Warrant and, in
the case of any such loss, theft or destruction, upon receipt of indemnity or security satisfactory
to the Issuer or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen, destroyed or mutilated
Warrant, a new Warrant of like tenor and representing the right to purchase the same number of
shares of Warrant Stock.

     (e) Registration Rights. The Holders of the Common Stock issuable upon the conversion
of the Preferred Stock comprising the Warrant Stock, or if all of the outstanding shares of
Preferred Stock have been converted into Common Stock, the Common Stock comprising the Warrant
Stock shall be entitled to one (1) demand registration, and unlimited piggyback registrations, on
the terms and subject to the conditions, mutatis mutandis, contained in that certain Subscription
and Rights Agreement. The demand shall be initiated the Majority Holders.

5

 

     4. Adjustment of Warrant Price and Warrant Share Number. The number of shares of
Warrant Stock for which this Warrant is exercisable, and the price at which such shares may be
purchased upon exercise of this Warrant, shall be subject to adjustment from time to time as set
forth in this Section 4. The Issuer shall give the Holder notice of any event described below which
requires an adjustment pursuant to this Section 4 in accordance with Section 5.

     A. Until such time as the Preferred Stock shall be converted in accordance with its terms into
Common Stock:

          (a) Stock Splits and Combinations. If outstanding shares of
the Preferred Stock shall be subdivided into a greater number of shares,
the Warrant Price in effect immediately prior to such subdivision or at
the record date of such stock dividend shall simultaneously with the
effectiveness of such subdivision or immediately after the record date of
such dividend be proportionately reduced. If outstanding Preferred Stock
shall be combined into a smaller number of shares, the Warrant Price in
effect immediately prior to such combination shall, simultaneously with
the effectiveness of such combination, be proportionately increased. When
any adjustment is required to be made in the Warrant Price pursuant to
this subsection A(a), the number of shares of Warrant Stock purchasable
upon the exercise of this Warrant shall be changed to the number
determined by dividing (i) an amount equal to the number of shares
issuable upon the exercise of this Warrant immediately prior to such
adjustment, multiplied by the Warrant Price in effect immediately prior to
such adjustment, by (ii) the Warrant Price in effect immediately after
such adjustment.

          (b) Adjustment for Dividends or Distributions of Stock or Other
Securities or Property. If the Issuer 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 Preferred
Stock payable in (a) securities of the Issuer or (b) assets (excluding
cash dividends paid or payable solely out of retained earnings), (the
“Distribution”) then, in each such case, the Holders 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 Preferred Stock (or such other stock or
securities) issuable on such exercise prior to such date, and without the
payment of additional consideration therefor, the securities or such other
assets of the Issuer to which such Holder would have been entitled upon
such date if such Holder had exercised this Warrant on the date hereof

6

 

and had thereafter, during the period from the date hereof to and
including the date of such exercise, retained such shares or all other
additional stock available by it as aforesaid during such period giving
effect to all adjustments called for by Section 4A.

          (c) Reclassification, Etc. In case there occurs any
reclassification or change of the outstanding securities of the Issuer or
of any reorganization of the Issuer (or any other corporation the stock or
securities of which are at the time receivable upon the exercise of this
Warrant) or any similar corporate reorganization on or after the date
hereof, then and in each such case the Holder, upon the exercise hereof at
any time after the consummation of such reclassification, change, or
reorganization shall be entitled to receive, in lieu of the stock or other
securities and property receivable upon the exercise hereof prior to such
consummation, the stock or other securities or property to which such
Holder would have been entitled upon such consummation if such Holder had
exercised this Warrant immediately prior thereto, all subject to further
adjustment pursuant to the provisions of Section 4A.

          (d) Conversion of Preferred Stock. If all of the outstanding shares of Preferred Stock have been converted into shares of Common Stock,
then this Warrant shall automatically become exercisable for that number
of shares of Common Stock equal to the number of shares of Common Stock
that would have been received if this Warrant had been exercised in full
and the shares of Preferred Stock received thereupon had been simultaneously
converted into shares of Common Stock immediately prior to such event, and
the Warrant Price shall be automatically adjusted to equal the number obtained
by dividing (i) the aggregate Warrant Price of the shares of Preferred Stock for
which this Warrant was exercisable immediately prior to such redemption or
conversion, by (ii) the number of shares of Common Stock for which this
Warrant is exercisable immediately after such redemption or conversion,
in all such cases, subject to further adjustment pursuant to the provisions
of Section 4B.

B. At any time in which only Common Stock shall be purchasable upon exercise of this Warrant:

     (a) Recapitalization, Reorganization, Reclassification, Consolidation, Merger or Sale.

          (i) In case the Issuer shall do any of the following (each, a
"Triggering Event”): (a) consolidate with or merge into any other
Person

7

 

and the Issuer shall not be the continuing or surviving corporation of
such consolidation or merger, or (b) permit any other Person to consolidate
with or merge into the Issuer and the Issuer shall be the continuing or
surviving Person but, in connection with such consolidation or merger, either
the Common Stock or the Preferred Stock of the Issuer shall be changed into or
exchanged for Securities of any other Person or cash or any other property, or
(c) transfer all or substantially all of its properties or assets to any other
Person, or (d) effect a capital reorganization or reclassification of its
Capital Stock, then, and in the case of each such Triggering Event, proper
provision shall be made so that, upon the basis and the terms and in the
manner provided in this Warrant, the Holder of this Warrant shall be entitled
(x) upon the exercise hereof at any time after the consummation of such
Triggering Event, to the extent this Warrant is not exercised prior to such
Triggering Event, to receive at the Warrant Price in effect at the time
immediately prior to the consummation of such Triggering Event in lieu of the
Common Stock issuable upon such exercise of this Warrant prior to such
Triggering Event, the Securities, cash and property to which such Holder would
have been entitled upon the consummation of such Triggering Event if such
Holder had exercised the rights represented by this Warrant immediately prior
thereto, subject to adjustments (subsequent to such corporate action) as
nearly equivalent as possible to the adjustments provided for elsewhere in
this Section 4B or (y) to sell this Warrant (or, at such Holder’s election, a
portion hereof) concurrently with the Triggering Event to the Person
continuing after or surviving such Triggering Event, or to the Issuer (if
Issuer is the continuing or surviving Person) at a sales price equal to the
amount of cash, property and/or Securities to which a holder of the number of shares
of Common Stock which would otherwise have been delivered upon the exercise of this
Warrant would have been entitled upon the effective date or closing of any such
Triggering Event (the “Event Consideration”), less an amount equal to the aggregate
Warrant Price applicable to this Warrant or the portion hereof so sold.

          (ii) Notwithstanding anything contained in this Warrant to the contrary,
the Issuer will not effect any Triggering Event unless, prior to the
consummation thereof, each Person (other than the Issuer) which may he
required to deliver any Securities, cash or property upon the exercise of this
Warrant as provided herein shall assume, by written instrument delivered to,
and reasonably satisfactory to the Holder of this Warrant, (A) the obligations
of the Issuer under this Warrant (and if the Issuer shall survive the
consummation of such Triggering Event, such assumption shall be in addition
to, and shall not release the Issuer from, any continuing obligations of the
Issuer under this Warrant) and (B) the obligation to deliver to such

8

 

Holder such shares of Securities, cash or property as, in accordance with
the foregoing provisions of this subsection (a), such Holder shall be entitled
to receive, and such Person shall have similarly delivered to such Holder an
opinion of counsel for such Person, which counsel and opinion shall be
reasonably satisfactory to such Holder, stating that this Warrant shall
thereafter continue in full force and effect and the terms hereof (including,
without limitation, all of the provisions of this subsection (a)) shall be
applicable to the Securities, cash or property which such Person may be
required to deliver upon any exercise of this Warrant or the exercise of any
rights pursuant hereto.

          (iii) If with respect to any Triggering Event, the Holder of this Warrant
has exercised its right as provided in clause (y) of subparagraph (i) of this
subsection (a) to sell this Warrant or a portion thereof, the Issuer agrees
that as a condition to the consummation of any such Triggering Event the
Issuer shall secure such right of Holder to sell this Warrant to the Person
continuing after or surviving such Triggering Event and the Issuer shall not
effect any such Triggering Event unless upon or prior to the consummation
thereof the amounts of cash, property and/or Securities required under such
clause (y) are delivered to the Holder of this Warrant. The obligation of the
Issuer to secure such right of the Holder to sell this Warrant shall be
subject to such Holder’s cooperation with the Issuer, including, without
limitation, the giving of customary representations and warranties to the
purchaser in connection with any such sale. Prior notice of any Triggering
Event shall be given to the Holder of this Warrant in accordance with Section
11 hereof.

          (b) Stock Dividends. Subdivisions and Combinations. If the Issuer
shall:

          (i) take a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend payable in, or other distribution of,
Additional Shares of-Common Stock,

          (ii) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or

          (iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, then (1) the number of shares of Common
Stock for which this Warrant is exercisable immediately after the occurrence
of any such event shall be adjusted to equal the number of shares of Common
Stock which a record holder of the same number of shares of Common Stock for
which this Warrant is exercisable

9

 

immediately prior to the occurrence of such event would own or be
entitled to receive after the happening of such event, and (2) the Warrant
Price then in effect shall be adjusted to equal (A) the Warrant Price then in
effect multiplied by the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to the adjustment divided by (B) the
number of shares of Common Stock for which this Warrant is exercisable
immediately after such adjustment.

          (c) Certain Other Distributions. If the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:

          (i) cash (other than a cash dividend payable out of earnings or earned
surplus legally available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Issuer),

          (ii) any evidences of its indebtedness, any shares of stock of any class
or any other securities or property of any nature whatsoever (other than cash,
Common Stock Equivalents or Additional Shares of Common Stock), or

          (iii) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or any other
securities or property of any nature whatsoever (other than cash, Common Stock
Equivalents or Additional Shares of Common Stock),

then (1) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment multiplied by a fraction (A) the numerator of which shall be the
Per Share Market Value of Common Stock at the date of taking such record and
(B) the denominator of which shall be such Per Share Market Value minus the
amount allocable to one share of Common Stock of any such cash so
distributable and of the fair value (as determined in good faith by the Board
of Directors of the Issuer and supported by an opinion from an investment
banking firm of recognized national or regional standing reasonably acceptable
to the Holder) of any and all such evidences of indebtedness, shares of stock,
other securities or property or warrants or other subscription or purchase
rights so distributable, and (2) the Warrant Price then in effect shall be
adjusted to equal (A) the Warrant Price then in effect multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares

10

 

of Common Stock for which this Warrant is exercisable immediately after such
adjustment. A reclassification of the Common Stock (other than a change in par
value, or from par value to no par value or from no par value to par value)
into shares of Common Stock and shares of any other class of stock shall be
deemed a distribution by the Issuer to the holders of its Common
Stock of such shares of such other class of stock within the meaning of this Section 4B(c)
and, if the outstanding shares of Common Stock shall be changed into a larger
or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination, as
the case may be, of the outstanding shares of Common Stock within the meaning
of Section 4B(b).

          (d) Issuance of Additional Shares of Common Stock.

          (i) If at any time the Issuer shall issue or sell any Additional Shares
of Common Stock to a third party other than the Holder of this Warrant (or any
transferees of this Warrant) in exchange for consideration in an amount per
Additional Share of Common Stock which is less than the Warrant Price at the
time the Additional Shares of Common Stock are issued or sold, the adjustment
required under Section 4B(d) shall he made in accordance with the formula in
paragraph (ii) below. The provisions of paragraph (i) of Section 4B(d) shall
not apply to any issuance of Additional Shares of Common Stock for which an
adjustment is provided under Section 4B(b) or 4B(c). No adjustment of the
number of shares of Common Stock for which this Warrant shall be exercisable
shall be made under this paragraph (i) of Section 4B(d) upon the issuance of
any Additional Shares of Common Stock which are issued pursuant to the
exercise of any warrants or other subscription or purchase rights or pursuant
to the exercise of any conversion or exchange rights in any Common Stock
Equivalents, if any such adjustment shall previously have been made upon the
issuance of such warrants or other rights or upon the issuance of such Common
Stock Equivalents (or upon the issuance of any warrant or other rights
therefor) pursuant to Section 4B(f).

          (ii) If the Issuer at any time while this Warrant is outstanding, shall
issue any Additional Shares of Common Stock (otherwise than as provided in the
foregoing subsections (a) through (c) of this Section 4B), at a price per
share less than the Warrant Price then in effect or without consideration,
then the Warrant Price upon each such issuance shall be adjusted to that price
determined by multiplying the Warrant Price then in effect by a fraction:

11

 

          (A)
the numerator of which shall be equal to the sum of (x) the number of shares of Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus (y) provided that such
Additional Shares of Common Stock are not included in (x), the number
of shares of Common Stock which the aggregate consideration for the total number
of such Additional Shares of Common Stock so issued would purchase at a price
per share equal to the greater of the Per Share Market Value then in effect
and the Warrant Price then in effect, and

          (B) the denominator of which shall be equal to the number of shares of
Common Stock outstanding immediately prior to the issuance of such Additional
Shares of Common Stock plus (y) provided such number of shares
of Additional shares of Common Stock are not included in (x), the number of such Additional
Shares of Common Stock.

          (e) Intentionally Omitted.

          (f) Issuance of Common Stock Equivalents. If the Issuer shall
take a record of the Holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which the Issuer is the surviving corporation)
issue or sell, any Common Stock Equivalents, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or exchange
shall be less than the Warrant Price in effect immediately prior to the time
of such issue or sale, then the number of shares of Common Stock for which
this Warrant is exercisable and the Warrant Price then in effect shall be
adjusted as provided in Section 4B(d) on the basis that the maximum number of
Additional Shares of Common Stock necessary to effect the conversion or
exchange of all such Common Stock Equivalents shall be deemed to have been
issued and outstanding and the Issuer shall have received all of the
consideration payable therefor, if any, as of the date of actual issuance of
such Common Stock Equivalents. No further adjustments of the number of shares
of Common Stock for which this Warrant is exercisable and the Warrant Price
then in effect shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Common Stock Equivalents.

          (g) Superseding Adjustment. If, at any time after any adjustment
of the number of shares of Common Stock for which this Warrant is exercisable
and the Warrant Price then in effect shall have been made pursuant to Section
4B(f) as the result of any issuance of warrants, other rights or Common Stock
Equivalents, and (i) such warrants or other

12

 

rights, or the right of conversion or exchange in such other Common Stock
Equivalents, shall expire, and all or a portion of such warrants or other
rights, or the right of conversion or exchange with respect to all or a
portion of such other Common Stock Equivalents, as the case may be shall not
have been exercised, or (ii) the consideration per share for which shares of
Common Stock are issuable pursuant to such Common Stock Equivalents, shall
have been increased solely by virtue of provisions therein contained for an
automatic increase in such consideration per share upon the occurrence of a
specified date or event, then for each outstanding Warrant such previous
adjustment shall be rescinded and annulled and the Additional Shares of Common
Stock which were deemed to have been issued by virtue of the computation made
in connection with the adjustment so rescinded and annulled shall no longer be
deemed to have been issued by virtue of such computation. Upon the occurrence
of an event set forth in this Section 4B(g) above, there shall be a
recomputation made of the effect of such Common Stock Equivalents on the basis
of: (i) treating the number of Additional Shares of Common Stock or other
property, if any, theretofore actually issued or issuable pursuant to the
previous exercise of any such warrants or other rights or any such right of
conversion, or exchange, as having been issued on the date or dates of any
such exercise and for the consideration actually received and receivable
therefor, and (ii) treating any such Common Stock Equivalents which then
remain outstanding as having been granted or issued immediately after the time
of such increase of the consideration per share for which shares of Common
Stock or other property are issuable under such Common Stock Equivalents;
whereupon a new adjustment of the number of shares of Common Stock for which
this Warrant is exercisable and the Warrant Price then in effect shall be
made, which new adjustment shall supersede the previous adjustment so
rescinded and annulled.

          (h) Purchase of Common Stock by the Issuer. If the Issuer at any
time while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value,
then the Warrant Price upon each such purchase, redemption or acquisition
shall be adjusted to that price determined by multiplying such Warrant Price
by a fraction (i) the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such purchase, redemption or
acquisition minus the number of shares of Common Stock which the aggregate
consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the Per Share Market Value;
and (ii) the

13

 

denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For
the purposes of this subsection (h), the date as of which the Per Share Market
Price shall be computed shall be the date used to determine the price of such
purchase, redemption or acquisition of Common Stock. For the purposes of this
subsection (h), a purchase, redemption or acquisition of a Common Stock
Equivalent shall be deemed to be a purchase of the underlying Common Stock,
and the computation herein required shall he made on the basis of the full
exercise, conversion or exchange of such Common Stock Equivalent on the date
as of which such computation is required hereby to be made, whether or not
such Common Stock Equivalent is actually exercisable, convertible or
exchangeable on such date.

          (i) Other Provisions applicable to Adjustments under this
Section. The following provisions shall be applicable to the making of
adjustments of the number of shares of Common Stock for which this Warrant is
exercisable and the Warrant Price then in effect provided for in this Section
4B.

                    (i) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Common Stock Equivalents (or any
warrants or other rights therefor) shall be issued for cash consideration, the
consideration received by the Issuer therefor shall be the amount of the cash
received by the Issuer therefor, or, if such Additional Shares of Common Stock
or Common Stock Equivalents are offered by the Issuer for subscription, the
consideration received by the Issuer shall be the subscription price, or, if
such Additional Shares of Common Stock or Common Stock Equivalents are sold to
underwriters or dealers for public offering without a subscription offering,
the consideration received by the Issuer shall be the initial public offering
price (in any such case subtracting any amounts paid or receivable for accrued
interest or accrued dividends and without taking into account any
compensation, discounts or expenses paid or incurred by the Issuer for and in
the underwriting of, or otherwise in connection with, the issuance thereof).
To the extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair value of such consideration at
the time of such issuance as determined in good faith by the Board of
Directors of the Issuer. In case any Additional Shares of Common Stock or any
Common Stock Equivalents (or any warrants or other rights therefor) shall be
issued in connection with any merger in which the Issuer issues any
securities, the amount of consideration

14

 

therefor shall be deemed to be the fair value, as determined in good
faith by the Board of Directors of the issuer, of such portion of the assets
and business of the nonsurviving corporation as such Board in good faith shall
determine to be attributable to such Additional Shares of Common Stock, Common
Stock Equivalents, or any warrants or other rights therefor, as the case may
be. The consideration for any Additional Shares of Common Stock issuable
pursuant to any warrants or other rights to subscribe for or purchase the same
shall be the consideration received by the Issuer for issuing such warrants or
other rights plus the additional consideration payable to the Issuer upon
exercise of such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any Common
Stock Equivalents shall be the consideration received by the Issuer for
issuing warrants or other rights to subscribe for or purchase such Common
Stock Equivalents, plus the consideration paid or payable to the Issuer in
respect of the subscription for or purchase of such Common Stock Equivalents,
plus the additional consideration, if any, payable to the Issuer upon the
exercise of the right of conversion or exchange in such Common Stock
Equivalents. In case of the issuance at any time of any Additional Shares of
Common Stock or Common Stock Equivalents in payment or satisfaction of any
dividends upon any class of stock other than Common Stock, the Issuer shall be
deemed to have received for such Additional Shares of Common Stock or Common
Stock Equivalents a consideration equal to the amount of such dividend so paid
or satisfied.

          (ii) When Adjustments to Be Made. The adjustments required by
this Section 4B shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number
of shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision or
combination of shares of the Common Stock, as provided for in Section 4B(b))
up to, but not beyond the date of exercise if such adjustment either by itself
or with other adjustments not previously made adds or subtracts less than one
percent (1%) of the shares of Common Stock for which this Warrant is
exercisable immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount (except as aforesaid)
which is postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 4B and
not previously made, would result in a minimum adjustment or on the date of
exercise. For the purpose of any adjustment, any specified event shall be
deemed to have occurred at the close of business on the date of its
occurrence.

15

 

          (iii) Fractional interests. In computing adjustments under this
Section 4B, fractional interests in Common Stock shall be taken into account
to the nearest one one-hundredth (1 /100th) of a share.

          (iv) When Adjustment Not Required. If the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and
shall, thereafter and before the distribution to stockholders thereof, legally
abandon its plan to pay or deliver such dividend, distribution, subscription
or purchase rights, then thereafter no adjustment shall be required by reason
of the taking of such record and any such adjustment previously made in
respect thereof shall be rescinded and annulled. In addition, no adjustment
shall be required under Section 4B(d)(i) hereof in the event the Issuer issues
or sells Additional Shares in a transaction whose primary purpose is to
establish a relationship with the recipient thereof for strategic reasons and
not to raise capital.

     (k) Form of Warrant after Adjustments. The form of this
Warrant need not be changed because of any adjustments in the Warrant Price or
the number and kind of Securities purchasable upon the exercise of this
Warrant.

     (1) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4B by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the
event for which such record is taken, and the Holder exercises this Warrant,
any shares of Common Stock issuable upon exercise by reason of such adjustment
shall be deemed the last shares of Common Stock for which this Warrant is
exercised (notwithstanding any other provision to the contrary herein) and
such shares or other property shall be held in escrow for the Holder by the
Issuer to be issued to the Holder upon and to the extent that the event
actually takes place, upon payment of the current Warrant Price.
Notwithstanding any other provision to the contrary herein. if the event for
which such record was taken fails to occur or is rescinded, then such
escrowed shares shall be cancelled by the Issuer and escrowed property returned.

     5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share Number shall be
adjusted pursuant to Section 4 A or B hereof (for purposes of this Section 5, each an
“adjustment”), the issuer shall cause its Chief Financial Officer to prepare and execute a
certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated

16

 

(including a description of the basis on which the Board made any determination hereunder), and the Warrant Price and Warrant
Share Number after giving effect to such adjustment, and shall cause copies of such certificate to be delivered to the Holder of this Warrant promptly
after each adjustment. Any dispute between the Issuer and the Holder of this Warrant with respect
to the matters set forth in such certificate may at the request of the Holder of this Warrant, be
submitted to one of the national accounting firms currently known as the “big four” selected by
the Issuer and reasonably acceptable to the Holder. The firm so selected as provided in the
preceding sentence shall be instructed to deliver a written opinion as to such matters to the
Issuer and such Holder within thirty (30) days after submission to it of such dispute. Such
opinion shall be final and binding the parties hereto. The fees and expenses of such accounting
firm shall be paid by the Issuer.

     6. Fractional Shares. No fractional shares of Warrant Stock will be issued in
connection with an exercise hereof, but in lieu of such fractional shares, the Issuer shall make a
cash payment therefor equal in amount to the product of the applicable fraction multiplied by the
Per Share Market Value then in effect.

     7. Definitions. For the purposes of this Warrant, the following terms have the
following meanings:

     “Additional Shares of Common Stock” means all shares of Common Stock issued by the
Issuer after the date on which the Preferred Stock converted into Common Stock (the “Conversion
Date”), and all shares of Other Common, if any, issued by the Issuer after the Conversion Date,
except (i) the Warrant Stock; (ii) shares of Common Stock to be issued to strategic partners
and/or in connection with a strategic merger or acquisition; and (iii) shares of Common Stock or
the issuance of options to purchase shares of Common Stock to employees, officers, directors,
consultants and vendors in accordance with the Issuer’s equity incentive policies; and (iv) the
issuance of Securities pursuant to the conversion or exercise of convertible or exercisable
securities issued or outstanding prior to the date hereof; provided, that, the conversion, price
or exercise price shall not be reset to provide for the issuance of additional shares of Common
Stock.

     “Certificate of Incorporation” means the Certificate of Incorporation of the Issuer
as in effect on the Original Issue Date, and as hereafter from time to time amended, modified,
supplemented or restated in accordance with the terms hereof and thereof and pursuant to
applicable law.

     “Board” shall mean the Board of Directors of the Issuer.

     “Capital Stock” means and includes (i) any and all shares, interests, participations
or other equivalents of or interests in (however designated) corporate stock, including, without
limitation, shares of preferred or preference stock, (ii) all partnership interests (whether
general or limited) in any Person which is a partnership, (iii) all membership interests or

17

 

limited liability company interests in any limited liability company, and (iv) all equity or
ownership interests in any Person of any other type.

     “Common Stock” means the Common Stock, par value $.01 per share, of the
Issuer and any other Capital Stock into which such stock may hereafter be changed.

     “Common Stock Equivalent” means any Convertible Security or warrant, option or other
right to subscribe for or purchase any Additional Shares of Common Stock or any Convertible
Security.

     “Convertible Securities” means evidences of Indebtedness, shares of Capital Stock or
other Securities which are or may be at any time convertible into or exchangeable for Additional
Shares of Common Stock. The term “Convertible Security” means one of the Convertible Securities.

     “Governmental Authority” means any governmental, regulatory or self-regulatory
entity, department, body, official, authority, commission, board, agency or instrumentality,
whether federal, state or local, and whether domestic or foreign.

     “Holders” mean the Persons who shall from time to time own any Warrant. The term
“Holder” means one of the Holders.

     “Independent Appraiser” means a nationally recognized or major regional investment
banking firm or firm of independent certified public accountants of recognized standing (which may
be the firm that regularly examines the financial statements of the Issuer) that is regularly
engaged in the business of appraising, the Capital Stock or assets of corporations or other
entities as going concerns and which is not affiliated with either the Issuer or the Holder of any
Warrant.

     “Issuer” means BIODEL Inc., a Delaware corporation, and its successors.

     “Majority Holders” means at any time the Holders of Warrants exercisable for a
majority of the shares of Warrant Stock issuable under the Warrants at the time, outstanding.

     “Nasdaq” means The Nasdaq National Market.

     “Original Issue Date” means July 14, 2005.

     “OTC Bulletin Board” means the over-the-counter electronic bulletin
board.

     “Other Common” means any other Capital Stock or Convertible Securities of the Issuer
of any class (including Common Stock Equivalents) which shall be authorized at any time after the
date of this Warrant (other than Common Stock) and which shall have the right to participate in
the distribution of earnings and assets of the Issuer.

18

 

     “Person” means an individual, corporation, limited liability company, partnership,
joint stock company, trust, unincorporated organization, joint venture, Governmental Authority or
other entity of whatever nature.

     “Per Share Market Value” means on any particular date (1) if the Warrant Stock is only
Common Stock (a) the closing bid price per share or last sales price per share, as applicable, of
the Common Stock on such date on the Nasdaq or another registered national stock exchange on which
the Common Stock is then listed, or if there is no such price on such date, then the closing bid
price on such exchange or quotation system on the date nearest preceding such date, or (b) if the
Common Stock is not listed then on the Nasdaq or any other registered ,national stock
exchange, the closing bid price for a share of Common Stock in the over-the-counter market, as
reported by the OTC Bulletin Board or in the National Quotation Bureau Incorporated or similar
organization or agency succeeding to its functions of reporting prices) at the close of business on
such date, or (c) if the Common Stock is not then reported by the OTC Bulletin Board or the
National Quotation Bureau Incorporated (or similar organization or agency succeeding to its
functions of reporting prices), then the average of the “Pink Sheet” quotes for the relevant
conversion period, as determined in good faith by the Board, or (d) if the Common Stock is not then
publicly traded the fair market value of a share of Common Stock as determined by an Independent
Appraiser selected in good faith by the Board; provided, that all determinations of the Per
Share Market Value shall be appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. The determination of fair market value by an Independent
Appraiser shall be based upon the fair market value of the Issuer determined on a going concern
basis as between a willing buyer and a willing seller and taking into account all relevant factors
determinative of value, and shall be final and binding on all parties. In determining the fair
market value of any shares of Common Stock, no consideration shall be given to any restrictions on
transfer of the Common Stock imposed by agreement or by federal or state securities laws, or to the
existence or absence of, or any limitations on, voting rights; and (2) if the Warrant Stock is
Preferred Stock, the product of (1) above multiplied by the number of shares of Common Stock then
issuable upon the conversion of a share of Preferred Stock.

     “Securities” means any debt or equity securities of the Issuer, whether now or
hereafter authorized, any instrument convertible into or exchangeable for Securities or a Security
and any option, warrant or other right to purchase or acquire any Security. Security means one of
the Securities.

     “Securities Act” means the Securities Act of 1933, as amended, or any similar federal
statute then in effect.

     “Subsidiary means any corporation at least 50% of whose outstanding
Voting Stock shall at the time be owned directly or indirectly by the Issuer or by one or more of
its Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

19

 

     “Term”
has the meaning specified in Section 1 hereof.

     “Trading Day” means (a) a day on which the Common Stock is traded on the Nasdaq, or
(b) if the Common Stock is not listed on the Nasdaq, a day on which the Common Stock
is traded on any other registered national stock exchange, or (c) if the Common Stock is not
traded on any other registered national stock exchange, a day on which the Common Stock is traded
on the OTC Bulletin Board, or (d) if the Common Stock is not traded on the OTC Bulletin Board, a
day on which the Common Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a), (b) and (c) hereof, then Trading Day shall mean any day
except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other government action
to close.

     “Warrants” means the Warrants issued to McGinn Smith Holdings, LLC and/or its
permitted assigns as compensation for the private placement of Series A Convertible Preferred
Stock in accordance with the Letter Agreement dated December 1, 2004, including, without
limitation, this Warrant, and any other warrants, of like tenor issued in substitution or exchange
for any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or of any of such
other Warrants.

     “Warrant Price” means $5.00 per share in respect of Warrant Stock in the form of
Preferred Stock, and $1.00 per share in respect of Warrant Stock in the form of Common Stock, as
such prices may be adjusted from time to time as shall result from the adjustments specified in
this Warrant, including Section 4 hereto.

     “Warrant Share Number” means at any time the aggregate number of shares of Warrant
Stock which may at such time be purchased upon exercise of this Warrant, after giving effect to all
prior adjustments and increases to such number made or required to be made under the terms hereof.

     “Warrant Stock” means initially the Preferred Stock issuable upon exercise of any
Warrant and if all of the Preferred Stock has been converted into Common Stock, then “Warrant
Stock” means the Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
issuable pursuant to any Warrant or Warrants.

     8. Other Notices. In case at any time:

	 	(A)	 	the Issuer shall make any
distributions to the holders of any Securities; or

20

 

	 	(B)	 	the Issuer shall authorize the
granting to all holders of any Securities of rights to
subscribe for or purchase any shares of Capital Stock of any
class or of any Common Stock Equivalents or other rights; or
	 
	 	(C)	 	there shall be any
reclassification of the Capital Stock of
the Issuer: or
	 
	 	(D)	 	there shall be any capital reorganization by the Issuer; or
	 
	 	(E)	 	there shall be any (i)
consolidation or merger involving the Issuer or (ii) sale,
transfer or other disposition of all or substantially all of
the Issuer’s property, assets or business (except a merger or
other reorganization in which the Issuer shall be the surviving
corporation and its shares of Capital Stock shall continue to
be outstanding and unchanged and except a consolidation,
merger, sale, transfer or other disposition involving a
wholly-owned Subsidiary); or
	 
	 	(F)	 	there shall be a voluntary or
involuntary dissolution, liquidation or winding-up of the
Issuer or any partial liquidation of the Issuer or distribution
to holders of Common Stock:

then, in each of such cases, the Issuer shall give written notice to the Holder of’ the date on
which (i) the books of the Issuer shall close or a record shall be taken for such dividend,
distribution or subscription rights or (ii) such reorganization, reclassification, consolidation,
merger, disposition, dissolution, liquidation or winding-up, as the case may be, shall take
place. Such notice also shall specify the date as of which the holders of the Securities of
record shall participate in such dividend, distribution or subscription rights, or shall be
entitled to exchange their certificates for Securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, disposition, dissolution, liquidation or
winding-up, as the case may be. Such notice shall be given at least ten (10) days prior to the
action in question and not less than ten (10) days prior to the record date or the date on which
the Issuer’s transfer books are closed in respect thereto. This Warrant entitles the Holder to
receive copies of all financial and other information distributed or required to be distributed
to the holders of any of the Securities.

     9. Amendment and Waiver. Any term, covenant agreement or condition in this Warrant
may be amended, or compliance therewith may be waived (either generally or in a particular
instance and either retroactively or prospectively), by a written instrument or written
instruments executed by the Issuer and the Majority Holders; provided, however,
that

21

 

no such amendment or waiver shall reduce the Warrant Share Number, increase the Warrant
Price, shorten the period during which this Warrant may be exercised or modify any provision of
this Section 9 without the consent of the Holder of this Warrant.

     10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS TO BE MADE AND PERFORMED
THEREIN, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD APPLY BY THE LAW OF A
JURISDICTION OTHER THAN THE LAWS OF THE STATE OF NEW YORK.

     11. Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earlier of (i) the date of transmission if such notice or communication is delivered via
facsimile at the facsimile telephone number specified for notice prior to 5:00 p.m., eastern time,
on a Trading Day, (ii) the Trading Day after the date of transmission if such notice or
communication is delivered via facsimile at the facsimile telephone number specified for notice
later than 5:00 p.m., eastern time, on any date and earlier than 11:59 p.m., eastern time, on such
date, (iii) the Trading Day following the date of mailing, if sent by nationally recognized
overnight courier service or (iv) actual receipt by the party to whom such notice is required to
be given. The addresses for such communications shall be with respect to the Holder of this
Warrant or of Warrant Stock issued pursuant hereto, addressed to such Holder at its last known
address or facsimile number appearing on the books of the issuer maintained for such purposes or
with respect to the Issuer, addressed to:

	 	 	 	 	 
	If to the Company, to:

	 	Dr. Solomon S. Steiner, Chairman
	 	 
	 

	 	Biodel Inc.	 	 
	 

	 	6 West Kenosia Avenue	 	 
	 

	 	Danbury, CT 06810	 	 
	 

	 	Fax No.: (203) 798-3601	 	 
	 
	 	 	 	 
	With copies (which copies shall not constitute notice to the Issuer) to:	 	 
	 
	 	 	 	 
	 

	 	William D. Freedman, Esq.
	 	 
	 

	 	Jenkens & Gilchrist Parker Chapin LLP	 	 
	 

	 	405 Lexington Avenue	 	 
	 

	 	New York, New York 10174	 	 
	 

	 	Fax No.: (212) 704-6288	 	 

22

 

If to                               , to:

With copies (which copies shall not constitute notice to):

Any party hereto may from time to time change its address for notices by giving at least ten (10)
days written notice of such changed address to the other party hereto.

     12. Remedies. The Issuer stipulates that the remedies at law of the Holder of this
Warrant in the event of any default or threatened default by the Issuer in the performance of or
compliance with any of the terms of this Warrant are not and will not be adequate and that, to the
fullest extent permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction against a violation of
any of the terms hereof or otherwise.

     13. Successors and Assigns. This Warrant and the rights evidenced hereby shall inure
to the benefit of and be binding upon the successors and assigns of the Issuer, the Holder hereof
and (to the extent provided herein) the Holders of Warrant Stock issued pursuant hereto, and shall
be enforceable by any such Holder or Holder of Warrant Stock.

     14. Modification and Severability. If in any action before any court or agency
legally empowered to enforce any provision contained herein, any provision hereof is found to be
unenforceable, then such provision shall be deemed modified to the extent necessary to make it
enforceable by such court or agency. If any such provision is not enforceable as set forth in the
preceding sentence, the unenforceability of such provision shall not affect the other provisions
of this Warrant but this Warrant shall be construed as if such unenforceable provision had never
been contained herein.

     15. Headings. The headings of the Sections of this Warrant are for convenience of
reference only and shall not for any purpose, be deemed a part of this Warrant.

[Rest of this page intentionally left blank]

23

 

     IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year first above
written.

	 	 	 	 	 	 	 
	 	 	BIODEL INC.	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:
	 	 
	 

	 	 	 	Title:	 	 

24

 

EXERCISE FORM

BIODEL INC.

     The undersigned                    , pursuant to the provisions of the within Warrant, hereby elects to
purchase ___ shares of Warrant Stock of BIODEL Inc. covered by the within Warrant and represents
that it is an “accredited investor” as such term is defined in Regulation D of the Securities Act
of 1933, as amended.

	 	 	 	 	 	 	 
	Dated:
	 	 	 	Signature	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Address	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

ASSIGNMENT

     FOR VALUE RECEIVED,                      hereby sells, assigns and transfers unto                      the
within Warrant and all rights evidenced thereby and does irrevocably constitute and appoint
                    , attorney, to transfer the said Warrant on the books of the within named corporation
and represents that it is an “accredited investor” as such term is defined in Regulation D of the
Securities Act of 1933, as amended.

	 	 	 	 	 	 	 
	Dated:
	 	 	 	Signature	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Address	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

PARTIAL ASSIGNMENT

     FOR VALUE RECEIVED,                      hereby sells, assign and transfers unto                      the right to purchase
___ shares of Warrant Stock evidenced by the within Warrant together with all
rights therein, and does irrevocably constitute and appoint                     , attorney, to transfer
that part of the said Warrant on the books of the within named corporation and represents that it
is an “accredited investor” as such term is defined in Regulation D of the Securities Act of 1933,
as amended.

	 	 	 	 	 	 	 
	Dated:
	 	 	 	Signature	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Address

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