Document:

EX-10.3

Exhibit 10.3

THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS
OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT AN
OPINION IS REQUIRED PURSUANT TO THE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED.

MEMORY PHARMACEUTICALS CORP.

WARRANT TO PURCHASE COMMON STOCK

No.

________________

December 19, 2005 Void After December 18, 2010

This Certifies That, for value received, The Stanley Medical Research Institute, with
its principal office at 5430 Grosvenor Lane, Suite 200 Bethesda, MD, 20814 or its successors and
permitted assigns (the “Holder”), is entitled to subscribe for and purchase at the Exercise Price
(defined below) from Memory Pharmaceuticals Corp., a Delaware corporation, with its principal
office at 100 Philips Parkway, Montvale, New Jersey 07645 (the “Company”) up to 154,128 shares of
the common stock of the Company, par value $.001 per share (the “Common Stock”), subject to
adjustment as provided herein. This Warrant is being issued pursuant to the terms of the
Securities Purchase Agreement, dated December 19, 2005, among the Company and the original Holder
of this Warrant (the “Purchase Agreement”). Capitalized terms not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Purchase Agreement.

1.  Definitions. As used herein, the following terms shall have
the meanings ascribed to them below:

(a) “Exercise Period” shall mean the period commencing 180 days after the date hereof and
ending December 18, 2010 at 5:00 p.m., unless sooner exercised or terminated as provided below.

(b) “Exercise Price” shall mean $2.62 per share, subject to adjustment pursuant to Section 5
below.

(c) “Warrant Shares” shall mean the shares of the Common Stock issued upon exercise of this
Warrant, subject to adjustment pursuant to the terms herein, including but not limited to
adjustment pursuant to Section 5 below.

2.  Exercise of Warrant.

2.1. Method of Exercise. The rights represented by this Warrant may be exercised in whole or
in part at any time during the Exercise Period, by delivery of the following to the Company at its
address set forth above (or at such other address as it may designate by notice in writing to the
Holder):

(a) an executed Notice of Exercise in the form attached hereto;

(b) payment of the Exercise Price either (i) by check payable to the order of the Company, or
(ii) pursuant to a Cashless Exercise, as described below; and

(c) this Warrant.

Upon the exercise of the rights represented by this Warrant, shares of Common Stock shall be
issued for the Warrant Shares so purchased, and shall be registered in the name of the Holder or
persons affiliated with the Holder, if the Holder so designates, within a reasonable time after the
rights represented by this Warrant shall have been so exercised and shall be issued in certificate
form and delivered to the Holder, if so requested.

The person in whose name any Warrant Shares are to be issued upon exercise of this Warrant
shall be deemed to have become the holder of record of such shares on the date on which this
Warrant was surrendered and payment of the Exercise Price was made, irrespective of the date of
issuance of the shares of Common Stock, except that, if the date of such surrender and payment is a
date when the stock transfer books of the Company are closed, such person shall be deemed to have
become the holder of such shares at the close of business on the next succeeding date on which the
stock transfer books are open.

2.2. Cashless Exercise. Notwithstanding any provisions herein to the contrary, if, at any
time during the Exercise Period, the Current Market Price (as defined below) of one share of Common
Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless
exercise by surrender of this Warrant at the principal office of the Company together with the
properly endorsed Notice of Exercise and the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:

X = (Y*(B-A)/B)

X = the number of shares of Common Stock to be issued to the Holder.

Y = the number of shares of Common Stock purchasable upon exercise of all of the
Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being
exercised.

A = the Exercise Price.

B = the Current Market Price of one share of Common Stock.

“Current Market Price” means on any particular date:

(a) if the Common Stock is traded on the Nasdaq SmallCap Market or the Nasdaq National Market,
the average of the closing prices of the Common Stock on such market over the five trading days
ending immediately prior to the applicable date of valuation;

(b) if the Common Stock is traded on any registered national stock exchange but is not traded
on the Nasdaq SmallCap Market or the Nasdaq National Market, the average of the closing prices of
the Common Stock on such exchange over the five trading days ending immediately prior to the
applicable date of valuation;

(c) if the Common Stock is traded over-the-counter, but not on the Nasdaq SmallCap Market, the
Nasdaq National Market or a registered national stock exchange, the average of the closing bid
prices over the 30-day period ending immediately prior to the applicable date of valuation; and

(d) if there is no active public market for the Common Stock, the value thereof, as determined
in good faith by the Board of Directors of the Company upon due consideration of the proposed
determination thereof by the Holder.

2.3. Partial Exercise. If this Warrant is exercised in part only, the Company shall, upon
surrender of this Warrant, execute and deliver, within 10 days of the date of exercise, a new
Warrant evidencing the rights of the Holder, or such other person as shall be designated in the
Notice of Exercise, to purchase the balance of the Warrant Shares purchasable hereunder. In no
event shall this Warrant be exercised for a fractional Warrant Share, and the Company shall not
distribute a Warrant exercisable for a fractional Warrant Share. Fractional Warrant Shares shall
be treated as provided in Section 6 hereof.

2.4. Delivery. Certificates for shares purchased hereunder shall be transmitted by the
transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker
with the Depository Trust Company through its Deposit Withdrawal Agent Commission system if the
Company is a participant in such system (and so long as the legend may be removed in accordance
with Section 3.8(b) of the Purchase Agreement), and otherwise by physical delivery to the address
specified by the Holder in the Notice of Exercise.

3.  Covenants of the Company.

3.1. Covenants as to Warrant Shares. The Company covenants and agrees that if at any time
during the Exercise Period the number of authorized but unissued shares of Common Stock shall not
be sufficient to permit exercise of this Warrant, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of
Common Stock (or other securities as provided herein) to such number of shares as shall be
sufficient for such purposes.

3.2. No Impairment. Except and to the extent as waived or consented to by the Holder or
otherwise in accordance with Section 10 hereof, the Company will not, by amendment of its
Certificate of Incorporation (as such may be amended from time to time), or through any means,
avoid or seek to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist in the carrying out
of all the provisions of this Warrant and in the taking of all such action as may be necessary or
appropriate in order to protect the exercise rights of the Holder against impairment.

3.3. Notices of Record Date. In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend which is the same as cash dividends
paid in previous quarters) or other distribution, the Company shall mail to the Holder, at least
ten days prior to the date specified herein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend or distribution.

4.  Representations of Holder.

4.1. Acquisition of Warrant for Personal Account. The Holder represents and warrants that it
is acquiring the Warrant and the Warrant Shares solely for its account and not with a present view
toward the public or distribution of said Warrant or Warrant Shares or any part thereof and has no
intention of selling or distributing said Warrant or Warrant Shares or any arrangement or
understanding with any other persons regarding the sale or distribution of said Warrant or, except
in accordance with the provisions of Article 6 of the Purchase Agreement, the Warrant Shares, and
except as would not result in a violation of the Securities Act. The Holder will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) the Warrant except in accordance with the
Securities Act and will not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) the
Warrant Shares except in accordance with the provisions of Article 6 of the Purchase Agreement or
pursuant to and in accordance with the Securities Act.

4.2. Securities Are Not Registered.

(a) The Holder understands that the offer and sale of the Warrant or the Warrant Shares have
not been registered under the Securities Act on the basis that no distribution or public offering
of the stock of the Company is to be effected. The Holder realizes that the basis for the
exemption may not be present if, notwithstanding its representations, the Holder has a present
intention of acquiring the securities for a fixed or determinable period in the future, selling (in
connection with a distribution or otherwise), granting any participation in, or otherwise
distributing the securities. The Holder has no such present intention.

(b) The Holder recognizes that the Warrant and the Warrant Shares must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption from such
registration is available. The Holder recognizes that the Company has no obligation to register
the Warrant or, except as provided in the Purchase Agreement, the Warrant Shares, or to comply with
any exemption from such registration.

(c) The Holder is aware that neither the Warrant nor the Warrant Shares may be sold pursuant
to Rule 144 adopted under the Securities Act unless certain conditions are met, including, among
other things, the existence of a public market for the shares, the availability of certain current
public information about the Company, the resale following the required holding period under Rule
144 and the number of shares being sold during any three month period not exceeding specified
limitations. Holder is aware that any such sale made in reliance on Rule 144, if Rule 144 is
available, may be made only in accordance with the terms of Rule 144.

4.3. Disposition of Warrant and Warrant Shares.

(a) The Holder understands that the Warrants and the Warrant Shares have not been and are not
being registered under the Securities Act (other than as contemplated in Article 6 of the Purchase
Agreement) or any applicable state securities laws and, consequently, the Purchaser may have to
bear the risk of owning the Warrant and the Warrant Shares for an indefinite period of time because
such securities may not be transferred unless (i) the resale of such securities is registered
pursuant to an effective registration statement under the Securities Act; (ii) the Holder has
delivered to the Company an opinion of counsel (in form, substance and scope reasonably
satisfactory to the Company) to the effect that the Warrants or Warrant Shares to be sold or
transferred may be sold or transferred pursuant to an exemption from such registration; or (iii)
such securities are sold or transferred pursuant to Rule 144

(b) The Holder understands and agrees that all certificates evidencing the Warrant Shares to
be issued to the Holder may bear a legend in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY
SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE
EXTENT THAT SUCH OPINION IS REQUIRED PURSUANT TO THAT CERTAIN
SECURITIES PURCHASE AGREEMENT UNDER WHICH THE SECURITIES WERE
ISSUED.

5.  Adjustment of Exercise Price. In the event of changes in the
outstanding Common Stock of the Company by reason of stock dividends, split-ups, recapitalizations,
reclassifications, combinations or exchanges of shares, separations, reorganizations, liquidations,
or the like (other than as set forth in Section 7), the number and class of shares available under
the Warrant in the aggregate and the Exercise Price shall be correspondingly adjusted to give the
Holder, on exercise for the same aggregate Exercise Price, the total number, class, and kind of
shares as the Holder would have owned had the Warrant been exercised prior to the event and had the
Holder continued to hold such shares until after the event requiring adjustment. The form of this
Warrant need not be changed because of any adjustment in the number, class, and kind of shares
subject to this Warrant. The Company shall promptly provide a certificate from its Chief Executive
Officer notifying the Holder in writing of any adjustment in the Exercise Price and/or the total
number, class, and kind of shares issuable upon exercise of this Warrant, which certificate shall
specify the Exercise Price and number, class and kind of shares under this Warrant after giving
effect to such adjustment.

6.  Fractional Shares. No fractional shares shall be issued upon
the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Warrant
Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes
of determining whether the exercise would result in the issuance of any fractional share. If, after
aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in
lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum
in cash equal to the product resulting from multiplying the fair market value of the Common Stock
on the date of exercise of the Warrant by such fraction.

7.  Certain Events. In the event of, at any time during the
Exercise Period, any capital reorganization, or any reclassification of the capital stock of the
Company (other than a change in par value or from par value to no par value or no par value to par
value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the
consolidation or merger of the Company with or into another corporation (other than a merger solely
to effect a reincorporation of the Company into another state), in each case, in which the
stockholders of the Company immediately prior to such capital reorganization, reclassification,
consolidation or merger, will hold less than a majority of the outstanding shares of the Company or
resulting corporation immediately after such capital reorganization, reclassification,
consolidation or merger, or the sale or other disposition of all or substantially all of the
properties and assets of the Company and its subsidiaries, taken as a whole, in its entirety to any
other person, other than sales or other dispositions that do not require stockholder approval
(each, an “Event”), then, as a condition of such Event, lawful and adequate provision shall be made
whereby each Holder shall thereafter have the right to purchase and receive upon the basis and upon
the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore
issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have
been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the
number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such
Event not taken place, and in any such case appropriate provision shall be made with respect to the
rights and interests of each Holder to the end that the provisions hereof (including, without
limitation, provision for adjustment of the Exercise Price) shall thereafter be applicable, as
nearly equivalent as may be practicable in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. The Company shall not effect any such Event unless
prior to or simultaneously with the consummation thereof the successor corporation (if other than
the Company) resulting from such consolidation or merger, or the corporation purchasing or
otherwise acquiring such assets or other appropriate corporation or entity shall assume the
obligation to deliver to the Holder, at the last address of the Holder appearing on the books of
the Company, such shares of stock, securities or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to purchase, and the other obligations under this Warrant.
The provisions of this Section 7 shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other dispositions.

8.  No Stockholder Rights. This Warrant in and of itself shall not
entitle the Holder to any voting rights or other rights as a stockholder of the Company.

9.  Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or
otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost,
stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.

10.  Modifications and Waiver. This Warrant and any provision
hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by
the Company and (i) Purchasers holding Warrants representing a majority of the number of Warrant
Shares then issuable upon exercise of the then unexercised Warrants, provided, however, that such
modification, amendment or waiver is made with respect to all unexercised Warrants issued pursuant
to the Purchase Agreement and does not adversely affect the Holder without adversely affecting all
holders of Warrants in a similar manner; or (ii) the Holder.

11.  Notices, etc. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party
to be notified, (b) when sent by confirmed email, telex or facsimile if sent during normal business
hours of the recipient, if not, then on the next business day, (c) five days after having been sent
by registered or certified mail, return receipt requested, postage prepaid, or (d) one business day
after deposit with a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company at the address
listed on the signature page and to the Holders at the addresses on the Company records, or at such
other address as the Company or Holder may designate by ten days’ advance written notice to the
other party hereto.

12.  Acceptance. Receipt of this Warrant by the Holder shall
constitute acceptance of and agreement to all of the terms and conditions contained herein.

13.  Governing Law. This Warrant and all rights, obligations and
liabilities hereunder shall be governed by the laws of the State of New York without regard to the
principles of conflict of laws. The Company and the Holder each irrevocably submit and consent to
the exclusive jurisdiction of the courts of the State of Maryland for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Warrant. The Company and the
Holder each irrevocably waive any objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waive any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum. THE COMPANY AND
EACH HOLDER WAIVE ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

14.  Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this
Warrant. The language in this Warrant shall be construed as to its fair meaning without regard to
which party drafted this Warrant.

15.  Severability. The invalidity or unenforceability of any
provision of this Warrant in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction, or affect any other provision of this Warrant, which
shall remain in full force and effect.

[Remainder of this page intentionally left blank.]

1

In Witness Whereof, the Company has caused this Warrant to be executed by its duly
authorized officer as of December 19, 2005.

MEMORY PHARMACEUTICALS CORP.

By:

Name:

Title:

Address: 100 Philips Parkway

Montvale, NJ 07645

Attn: President and Chief Executive
Officer

Facsimile: (201) 802-7190

2

NOTICE OF EXERCISE

TO: Memory Pharmaceuticals Corp.

(1) The undersigned hereby elects to (check one box only):

purchase      shares of the Common Stock of Memory Pharmaceuticals Corp. (the
“Company”) pursuant to the terms of the attached Warrant, and tenders herewith
payment of the exercise price in full for such shares, together with all
applicable transfer taxes, if any.

purchase the number of shares of Common Stock of the Company by cashless exercise
pursuant to the terms of the Warrant as shall be issuable upon cashless exercise
of the portion of the Warrant relating to      shares, and shall tender payment
of all applicable transfer taxes, if any.

(2) Please issue a certificate or certificates representing said shares of Common Stock in
the name of the undersigned or in such other name as is specified below:

(Name)

(Address)

(3) The undersigned represents that (i) the aforesaid shares of Common Stock are being
acquired for the account of the undersigned for investment and not with a view to, or for resale in
connection with, the distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business
affairs and financial condition and has acquired sufficient information about the Company to reach
an informed and knowledgeable decision regarding its investment in the Company; (iii) the
undersigned is experienced in making investments of this type and has such knowledge and background
in financial and business matters that the undersigned is capable of evaluating the merits and
risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned is
aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under
the Securities Act unless certain conditions are met and until the undersigned has held the shares
for the number of years prescribed by Rule 144, that among the conditions for use of the Rule is
the availability of current information to the public about the Company and the Company has not
made such information available and has no present plans to do so; and (v) the undersigned agrees
not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and
until there is then in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with said registration statement,
or the undersigned has provided the Company with an opinion of counsel satisfactory to the Company,
stating that such registration is not required.

Date:          

(Signature)

     

(Print Name)

3exv4w2

 

 Exhibit 4.2

THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR WITH ANY STATE SECURITY
COMMISSION, AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY THE HOLDER IN THE ABSENSE OF A
REGISTRATION STATEMENT WHICH IS EFFECTIVE UNDER THE ACT AND APPLICABLE STATE LAWS AND RULES, OR,
UNLESS, IMMEDIATELY PRIOR TO THE TIME SET FOR TRANSFER, SUCH TRANSFER MAY BE EFFECTED WITHOUT
VIOLATION OF THE ACT AND OTHER APPLICABLE STATE LAWS AND RULES.

WARRANT TO PURCHASE COMMON STOCK

OF

THERMA-WAVE, INC.

			
	W-___
	 	                    , 2005

          This is to certify that, FOR VALUE RECEIVED,                      or assigns (“Holder”), is
entitled to purchase, subject to the provisions of this Warrant, from Therma-Wave, Inc., a Delaware
corporation (“Company”),                      (___) fully paid, validly issued and
nonassessable shares of Common Stock of the Company (“Common Stock”) at a price of $1.55 per share
(as adjusted from time to time in accordance with the terms hereof, the “Exercise Price”)
at any time or from time to time during the period from May 22, 2006 through November 22, 2010,
provided, however, if either such day is a day on which banking institutions in the
State of California are authorized by law to close, then on the next succeeding day which shall not
be such a day (the “Exercise Period”) upon 61 days prior written notice or upon a Change of
Control (as defined below) occurring during the Exercise Period. This Warrant is one of a series
of warrants (collectively, the “Warrants”) originally issued in connection with a private
placement of the Company’s common stock pursuant to a Stock Purchase Agreement dated November 18,
2005 (the “Purchase Agreement”).

          The number of shares of Common Stock to be received upon the exercise of the Warrants and the
Exercise Price may be adjusted from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter sometimes
referred to as “Warrant Shares”.

     (a) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part at any time or
from time to time during the Exercise Period by presentation and surrender hereof to the Company at
its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form
annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of
Warrant Shares specified in such form, and the date such items are received by the Company is an
“Exercise Date.” The Holder shall pay the Exercise Price (i) in cash, by certified bank
check payable to the order of the Company or by wire transfer of immediately available funds in
accordance with the Company’s instructions or (ii) if the Current Market Value (as defined below)
exceeds the Exercise Price, by means of a “cashless exercise”, by presenting and surrendering to
the Company this Warrant, in which event the Company shall issue to the Holder the number of
Warrant Shares determined as follows:

 

 

	 	 	 	 	 
	 

	 	X =
	 	Y [(A-B)/A]
	 
	 	 	 	 
	 	 	where:
	 
	 	 	 	 
	 

	 	X =
	 	the number of Warrant Shares to
be issued to the Holder upon such cashless exercise;
	 
	 	 	 	 
	 

	 	Y =
	 	the number of Warrant Shares
with respect to which this Warrant is being exercised;
	 
	 	 	 	 
	 

	 	A =
	 	the Current Market Value on the
Exercise Date; and
	 
	 	 	 	 
	 

	 	B =
	 	the Exercise Price.

As soon as practicable after each such exercise of the warrants, and in any event within three (3)
business days thereafter, the Company shall issue and deliver to the Holder a certificate or
certificate for the Warrant Shares issuable upon such exercise, registered in the name of the
Holder or its designee. If this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights
of the Holder thereof to purchase the balance of the Warrant Shares purchasable hereunder. Upon
receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company
at its office, in proper form for exercise, the Holder shall be deemed to be the holder of record
of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing such shares of Common
Stock shall not then be physically delivered to the Holder.

     (b) RESERVATION OF SHARES. The Company shall at all times reserve, and keep available, solely
for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common
Stock as shall be required for issuance and delivery upon exercise of the Warrants.

     (c) PAYMENT OF TAXES AND EXPENSES. The Company and Holder shall each pay one-half of any
recording, filing, stamp or similar tax which may be payable in respect of any transfer involved in
the issuance of, and the preparation and delivery of certificates (if applicable) representing, (i)
any Warrant Shares purchased upon exercise of this Warrant and/or (ii) new or replacement warrants
in the Holder’s name or the name of any transferee of all or any portion of this Warrant.

     (d) FRACTIONAL SHARES. No fractional shares or script representing fractional shares shall be
issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon
any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the “Current Market Value” of a share, determined as follows:

     (1) If the Common Stock is listed on a national securities exchange or admitted to
unlisted trading privileges on such exchange or listed for trading on the

 

 

Nasdaq National Market, the Current Market Value shall be the last reported sale price
of the Common Stock on such exchange or market on the last business day prior to the date of
exercise of this Warrant or if no such sale is made on such day, the average closing bid and
asked prices for such day on such exchange or market; or

     (2) If the Common Stock is not so listed or admitted to unlisted trading privileges,
but is traded on the Nasdaq SmallCap Market, the Current Market Value shall be the closing
price for such day on such market and if the Common Stock is not so traded, the Current
Market Value shall be the mean of the last reported bid and asked prices reported by the
National Quotation Bureau, Inc. on the last business day prior to the date of the exercise
of this Warrant; or

     (3) If the Common Stock is not so listed or admitted to unlisted trading privileges and
bid and asked prices are not so reported, the Current Market Value shall be an amount, not
less than book value thereof as at the end of the most recent fiscal year of the Company
ending prior to the date of the exercise of the Warrant, determined in such reasonable
manner as may be prescribed by the Board of Directors of the Company (the “Board”).

     (e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights
of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited
to those expressed in the Warrant and are not enforceable against the Company except to the extent
set forth herein.

     (f) ADJUSTMENT PROVISIONS. The Exercise Price in effect at any time and the number and kind
of securities purchasable upon the exercise of the Warrants shall be subject to adjustment from
time to time upon the happening of certain events as follows:

     (1) In case the Company shall (i) declare a dividend or make a distribution on its
outstanding shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify
its outstanding shares of Common Stock into a greater number of shares, or (iii) combine or
reclassify its outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect at the time of the record date for such dividend or distribution or
of the effective date of such subdivision, combination or reclassification shall be adjusted
so that it shall equal the price determined by multiplying the Exercise Price by a fraction,
the denominator of which shall be the number of shares of Common Stock outstanding after
giving effect to such action, and the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such action. Such adjustment shall be made
successively whenever any event listed above shall occur.

     (2) Whenever the Exercise Price payable upon exercise of each Warrant is adjusted
pursuant to Subsection (1) above, the number of Shares purchasable upon exercise of this
Warrant shall simultaneously be adjusted by multiplying the number of Shares initially
issuable upon exercise of this Warrant by the Exercise Price in effect on the date hereof
and dividing the product so obtained by the Exercise Price, as adjusted.

 

 

     (3) In the event that at any time, as a result of an adjustment made pursuant to
Subsection (1) above, the Holder of this Warrant thereafter shall become entitled to receive
any shares of the Company, other than Common Stock, thereafter the number of such other
shares 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 Common Stock contained in Subsections (1) and (2) above.

     (4) Irrespective of any adjustments in the Exercise Price or the number or kind of
shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued
may continue to express the same price and number and kind of shares as are stated in the
similar Warrants initially issuable pursuant to this Agreement.

     (5) The Exercise Price may be adjusted from time to time in the same manner in which
adjustments are made to the Conversion Price (as defined in the Certificate of Designation)
in accordance with Section 6C of the Certificate of Designation of Rights, Preferences and
Privileges of the Series B Convertible Preferred Stock (the “Certificate of
Designation”); provided, however, that in no event shall the Exercise Price be reduced
below $1.40 (as adjusted for any stock dividends, combinations, reclassifications or
splits).

     (6) Upon the occurrence of each adjustment pursuant to this Section (f), the
Company will promptly deliver to the Holder a certificate executed by the Company’s Chief
Financial Officer setting forth, in reasonable detail, the event requiring such adjustment
and the method by which such adjustment was calculated, the adjusted Exercise Price and the
adjusted number or type of Warrant Shares or other securities issuable upon exercise of this
Warrant (as applicable). The Company will retain at its office copies of all such
certificates and cause the same to be available for inspection at said office during normal
business hours by the Holder or any prospective purchaser of the Warrant designated by the
Holder.

     (g) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the Company, or in case of
any consolidation or merger of the Company with or into another corporation (other than a merger
with a subsidiary in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of outstanding shares of
Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease or
conveyance to another corporation of the property of the Company as an entirety, the Company shall,
as a condition precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising this Warrant at any time prior to the
expiration of the Warrant, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such reclassification, capital reorganization and other change,
consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which
might have been purchased upon exercise of this Warrant immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance. Any such provision shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Warrant. The foregoing

 

 

provisions of this Section (g) shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances. In the event that in connection with any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional shares of Common Stock
shall be issued in exchange, conversion, substitution or payment, in whole or in part, for a
security of the Company other than Common Stock, any such issue shall be treated as an issue of
Common Stock covered by the provisions of Subsection (1) of Section (f) hereof.

     (h) REGISTRATION RIGHTS. The holders of the Warrants and the Warrant Shares or their
transferees shall have the registration rights set forth in the Registration Rights Agreement dated
November 22, 2005 between the Company and each of the signatories to the Purchase Agreement.

     (i) REDEMPTION. In the event of a Change of Control (as defined below) during the period
between the date of issuance of this Warrant and the expiration of the Exercise Period, prior to
such Change of Control, the Company shall give fifteen (15) days prior written notice of such
Change of Control describing in reasonable detail the material terms and anticipated date of
consummation thereof to the Holder. The Holder may, upon five (5) days prior written notice at any
time thereafter but prior to the Change of Control, at his or her option, require the Company to
repurchase for cash this Warrant, at the election of the Holder (i) for the amount the Holder would
have received in a complete liquidation occurring immediately prior to the Change of Control of the
Company pursuant to the terms of the Company’s Certificate of Incorporation, had this Warrant been
exercised by means of a “cashless exercise” pursuant to Section (a) immediately prior to such
liquidation or (ii) the amount the Holder would have received if the Holder was permitted to
exercise the Warrant by means of a “cashless exercise” pursuant to Section (a) immediately prior to
the Change of Control. If the Change of Control is a transaction in which the Common Stock of the
Company is being sold for stock or securities of another entity, the Holder may elect to receive
such stock or securities in lieu of cash; provided, however, under no circumstances
may such Holder elect to receive voting securities in the Company

     Any payment of consideration under this Section (i) shall be contingent upon the actual
closing of the Change of Control transaction.

     For purposes of this Section (i) and Section (j), “Change of Control” shall mean any
of the events described below:

     (1) The occurrence of any event that would, if known to the Company’s management, be
required to be reported by the Company under Item 5.01(a) of Form 8-K pursuant to the
Securities Exchange Act of 1934 (the “Exchange Act”); or

     (2) The acquisition or receipt, in any manner, by any person (as defined for purposes
of the Exchange Act) or any group of persons acting in concert, of direct or indirect
beneficial ownership (as defined for purposes of the Exchange Act) of fifty percent (50%) or
more of the combined voting securities ordinarily having the right to vote for the election
of directors of the Company; provided that the following shall not

 

 

constitute a Change of Control: (i) any acquisition directly from the Company; (ii) any
acquisition by the Company or any of its affiliates, or (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any of
its affiliates; or

     (3) A change in the constituency of the Board with the result that individuals (the
“Incumbent Directors”) who are members of the Board as of the date of this Warrant
cease for any reason to constitute at least a majority of the Board; provided that any
individual who is elected to the Board after the date of this Warrant and whose nomination
for election was unanimously approved by the Incumbent Directors shall be considered an
Incumbent Director beginning on the date of his or her election to the Board; or

     (4) Consummation of a merger, consolidation or reorganization involving the Company,
unless such merger, consolidation or reorganization results in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity or parent
thereof) more than fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity or parent thereof outstanding immediately
after such merger, consolidation or reorganization; or

     (5) A complete liquidation or dissolution of the Company;

     (6) A sale, exchange or other disposition or transfer of all or substantially all of
the Company’s business or assets, other than pursuant to a spin-off or comparable
transaction in which the transferee is controlled by the Company or its existing
stockholders immediately prior to such transfer; or

     (7) execution of a binding agreement with respect to a transaction that, if completed,
would constitute or result in a Change of Control.

     (j) TERMINATION OF WARRANT. In addition to the termination of this Warrant pursuant to the
second paragraph of Section (i) hereof, this Warrant shall expire and shall no longer be
exercisable on 5:00 p.m., California local time, on November 22, 2010; provided,
however, if either such day is a day on which banking institutions in the State of
California are authorized by law to close, then on the next succeeding day which shall not be such
a day.

     (k) MODIFICATIONS AND WAIVERS. The provisions of this Warrant may from time to time be
amended, modified or waived, if such amendment, modification or waiver is applicable to all of the
Warrants and is in writing and consented to by the Company and the holders of at least a majority
of the outstanding Warrants and Warrant Shares. Any such amendment, modification or waiver shall be
binding upon the holder of this Warrant (and any assignee thereof) regardless of whether the Holder
consented to such amendment, modification or waiver; provided that nothing shall prevent the
Company and a registered holder from consenting to amendments and modifications to this Warrant
which affect or are applicable to such registered holder only.

 

 

     (l) ASSIGNMENT. Holder may sell, transfer or assign this Warrant without the prior written
consent of the Company.

     (m) GOVERNING LAW. This Warrant shall be governed by and construed under the laws of the
State of Delaware (without giving effect to any conflicts or choice of law provisions thereof that
would cause the application of the domestic substantive laws of any other jurisdiction).

     (n) NOTICES. Any and all notices or other communications or deliveries hereunder shall be in
writing and shall be mailed by a nationally recognized courier service or delivered (in person or
by facsimile), against receipt to the party to whom such notice or other communication is to be
given. The address for such notices or communications shall be as set forth in the Purchase
Agreement entered into by the Holder and the Company. Any notice or other communication given by
means permitted by this Section (n) shall be deemed given at the time of receipt thereof.

     (o) NO IMPAIRMENT. The Company will not, by amendment of its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation, merger, dissolution, issuance or
sale of securities, sale or other transfer of any of its assets or properties, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to protect the rights of
the Holder hereunder against impairment. Without limiting the generality of the foregoing, the
Company (a) will not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefor on such exercise, (b) will take all
action that may be necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (c) will
not close its shareholder books or records in any manner which interferes with the timely exercise
of this Warrant.

     (p) SEVERABILITY. In case any one or more of the provisions contained in this Warrant shall
be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or impaired thereby.
The parties shall endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.

     (q) SECURITIES LAWS. Upon any issuance of Warrant Shares upon exercise of this Warrant, the
Company will be required to comply with the requirements of (1) the Securities Act, (2) the
Exchange Act, as amended, (3) any applicable listing requirements of any national securities
exchange, (4) any state securities regulation or “Blue Sky” laws, and (5) requirements under any
other law or regulation applicable to the issuance or transfer of such shares. If required by the
Company, in connection with each issuance of Warrant Shares upon exercise of this Warrant, the
Holder will give (x) assurances in writing, satisfactory to the Company, that such shares are not
being purchased with a view to the distribution thereof in violation of applicable laws, (y)
sufficient representations, warranties and information, in writing, to enable the Company to rely
on exemptions from the registration or qualification requirements of

 

 

applicable laws, if available, with respect to such exercise, and (z) the Holder’s cooperation
to the Company in connection with such compliance.

	 	 	 	 	 
	 	 	THERMA-WAVE, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

 

 

PURCHASE FORM

Dated                                         

          The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of
purchasing ___shares of Common Stock and hereby makes payment of $        in
payment of the actual exercise price thereof.

INSTRUCTIONS FOR REGISTRATION OF STOCK

Name                                                             

(Please typewrite or print in block letters)

Address                                         

Signature                                         

ASSIGNMENT FORM

          FOR VALUE RECEIVED,                                                              hereby sells, assigns                
     and                      transfers                      unto

Name                                                             

(Please typewrite or print in block letters)

Address                                         

the right to purchase Common Stock represented by this Warrant to the extent of ___shares as to which
such right is exercisable and does hereby irrevocably constitute and appoint                      Attorney, to transfer
the same on the books of the Company with full power of substitution in the premises.

Date                                         

Signature

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