Document:

Exhibit 10.2

Exhibit 10.2
PARTICIPATION AGREEMENT
This Participation Agreement (this "Agreement")  is entered into on February 16, 2007 by and among  PRC Williston LLC, a Delaware limited liability company (the "Company''), and D.B. Zwim Special Opportunities  Fund, L.P., a Delaware limited partnership, (together  with its successors   and  assigns  "Holder"). The Company and Holder are sometimes referred to collectively herein as the "Parties" and individually as a "Party".
RECITALS
A.        The Company is engaged in the exploration and production, acquisition, enhancement and exploitation of oil and gas reserves (including production related thereto) in the State of North Dakota.
B.     The Members of the Company hold a single class of membership interests (the "Interests").
C.        As a material inducement for Holder to extend credit to the Company under the Credit Agreement (defined below), the Company has agreed to execute this Agreement with Holder.
AGREEMENT
Therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows:
Section 1.     Definitions.
"Affiliate” means any person or entity, directly or indirectly, through one or more intermediaries, that controls, is controlled by, or is under common control with any other person or entity.  The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person or entity.
"Agreement" has the meaning set forth in the preface above.
"Applicable Equity Percentage" shall be six and one quarter percent (6-1/4%) as such amount may be adjusted pursuant to Section 2(c).
"Change of Control” shall mean an arm-length  transaction  resulting in any (a) sale of equity interests in the Company by any of its equity holders or their Affiliates, or (b) merger, consolidation or reorganization of the Company, if, in the case of both clause (a) and (b), equity holders and their Affiliates immediately prior to such transaction cease to beneficially  own, in the aggregate, at least 50% of the equity interests in the Company after such transaction.
"Change of Control Consideration” shall mean the consideration to be received by holders in respect of Interests in connection with a Change of Control.
"Change of Control Participation Amount" shall mean the product of (a) the Applicable Equity Percentage multiplied by (b) the Fair Market Value of the Company immediately prior to the Change of Control.
"Company” has the meaning set forth in the preface above.

"Credit Agreement” shall mean that Credit Agreement dated as of February 16, 2007 among PRC Williston LLC, as Borrower, D.B. Zwim Special Opportunities Fund, L.P., as Administrative Agent and the Lenders party thereto from time to time as amended or modified and in effect from time to time.
"Equity Distribution" shall mean any distribution of cash or other property from the Company to any Member on account of their membership interest or the ownership interest in the Company; provided, that an Equity Distribution shall not include any Tax Distribution.
"Equity Distribution Amount" shall mean the amount of cash plus the Fair Market Value of any other property distributed in an Equity Distribution.
"Equity Participation Amount" shall mean an amount equal to the Applicable Equity Percentage then in effect multiplied by the Equity Distribution Amount.
“Fair Market Value" shall mean, except as provided in the following sentence, the value that an unaffiliated third party would reasonably be expected to pay to purchase the item valued. The "Fair Market Value" of the Company shall mean the amount an arms-length third party would pay to receive all of the outstanding equity interests of the Company free and clear of any liens or encumbrances. The Fair Market Value of any item or the Company, as the case may be, shall be as determined in good faith by the Board of Directors or Parent and notified to Holder in writing, or, if Holder shall disagree with such determination, it may so notify the Company and a reputable investment bank or appraiser (the "independent Appraiser") mutually satisfactory to the Company and Holder shall be appointed to make such determination in accordance with the provisions of this Agreement.   If the Company and Holder shall be unable to agree upon an Independent  Appraiser,  then  Merrill  Lynch  or  its  successor  shall  serve  as  the  Independent Appraiser.  The  Independent  Appraiser  shall  make its determinations assuming, to the extent relevant, (i)  the consummation of  the  relevant  transaction  and  (ii)  such  other   valuation parameters  as deemed appropriate and (iii) without giving effect to this Agreement or any other participation  agreement  that  may  be  in  effect  at  such  time.  Subject  to  the  foregoing,  any valuation  or  determination  by  the Independent  Appraiser  shall  use  standard  valuation  and calculation   techniques   including  discounted  cash   flow   analysis,  multiples   of  comparable companies, prices paid in similar transactions, reserve report analysis or acquisitions of securities of  comparable  companies,  as  well  as  other  factors  deemed  relevant.    All  expenses  of  the Independent Appraiser  shall  be  paid  by  Company,  unless  the  determination  made  by  the Independent Appraiser differs from that of the Board of Directors of Parent by less than 10% of the quantity  or amount determined by the Board of Directors of  Parent, in which  case such expenses  shall  be paid by the Holder.   The decision of said Independent Appraiser shall be delivered in writing to the Company, not more than 60 days after selection of the Independent Appraiser and shall be final and binding.
"Holder” has the meaning set forth in the preface above. 
"lnterests" has the meaning set forth in the preface above. 
"Member" shall mean any member of the Company.
"Parent' shall mean Petro Resources Corporation, a Delaware corporation.
"Participation Amount" shall mean the Change of Control Participation Amount or the Equity Participation Amount, as the case may be.

"Party" has the meaning set forth in the preface above.
"Person” shall mean any natural person, corporation, limited liability company, general partnership, limited partnership, union, association, court, agency, government, tribunal, instrumentality, commission, arbitrator, board, bureau or other entity or authority.
"Tax  Distribution" means any distribution made for Taxes of the Members in connection with  the  income  of  the  Company  and  approved  by  the  Holder, such  approval  not  to  be unreasonably withheld.
Section 2.     Calculation and Payment of Participation Amounts. 
(a)    Timing of Payments.
(i)    Prior to or contemporaneously with making any Equity Distribution, the Company shall pay to Holder the Equity Participation Amount.
(ii)    Prior to or contemporaneously with the consummation of any Change of Control, the Company shall pay to Holder the Change of Control Participation Amount.
(b)       Form of Payment of Participation Amount.   The applicable  Participation Amount shall be paid in (a) cash, or (b) if and to the extent the Equity Distribution or Change of Control  Consideration  is  payable  in  the  form  of  securities  of  another  entity,  then  in  such securities,  but only to the extent and in the same  proportion that holders of Interests also are required to accept such securities.
(c)    Adjustment to the Applicable Equity Percentage.  If prior to the date that is 180 days after  the Effective Date (as defined in the Credit Agreement) Parent has made equity contributions to the Company, and such Equity Contributions are used to prepay principal under the Credit Agreement, the Applicable Equity Percentage shall be reduced by the Percentage set forth  in  the  table  below  with  respect  to  the  corresponding  amount  of  equity  that  has  been contributed to the Company, and is used to prepay principal under the Credit Agreement:

In no event shall the Participation Amount be reduced by more than 2.5% for any reason.   This Section 2(c) shall be of no further effect 180 days after the Effective Date (as defined in the Credit Agreement) and no further reductions to the Participation Amount shall be made.

Section 3.        Information  Rights.    At  any  time  after  repayment,  refinance or  other termination  of the obligations of the Company under the Credit Agreement, the Company shall provide  Holder  with  the  following  information,   which  Holder  shall  keep  confidential   in accordance with its customary practices and procedures:
(a)       In  connection  with  any  proposed  or completed Equity Distribution or Change of Control, reasonable access, during normal business hours, to the books and records of the Company and to the officers of the Company to discuss the Company's business and affairs;
(b)       As soon as available, and in any event within 45 days after the end of each quarterly period (the "Fiscal Quarter") of each fiscal year (the "Fiscal Year") of the Company, an unaudited consolidated statements of income, members' equity, changes in financial position and cash flow for the Company and its subsidiaries and the Parent and its Subsidiaries for such Fiscal Quarter and an unaudited balance sheet of the Company and its Subsidiaries and the Parent and its Subsidiaries  dated as of the end of such Fiscal Quarter, in each case prepared in accordance with generally accepted accounting principles consistently applied (subject to normal year-end adjustments)  accompanied  by the certificate of  a responsible officer of the Company  and the Parent, which certificate shall state that said financial statements fairly present the consolidated financial condition and results of operations of the Company and its subsidiaries or the Parent, as applicable, in accordance with generally accepted accounting principles, for such period (subject to normal year-end audit adjustments);
(c)       As soon as available, and in any event, within 90 days after the end of each Fiscal Year (i) the audited consolidated statements  of income, members' equity, changes in financial position and cash flow of the Company and its subsidiaries and the Parent and its Subsidiaries  for such Fiscal Year, and the related  consolidated  balance sheets of the Company and its subsidiaries  and the Parent and its Subsidiaries  as at the end of such  Fiscal Year, and accompanied  by the related opinion of Malone & Bailey or other independent public accountants of recognized national standing acceptable to Holder, which opinion shall state that said financial statements fairly present the consolidated financial condition and results of operations of the Company and its subsidiaries and the Parent and its subsidiaries, as the case may be, as at the end of, and for, such  Fiscal Year and that such financial statements have been prepared in accordance with generally accepted accounting  principles except for such changes in such  principles  with which the independent  public accountants shall  have concurred; and (ii) an audited statement showing  any amounts distributed  to the Members or their Affiliates in respect  of such  Fiscal Year;
(d)       Promptly  upon its becoming  available,  each  financial statement,  report, notice or proxy statement sent by the Company or any of subsidiaries to stockholders, members or holders of interests therein generally and each regular or periodic report and any registration statement,  prospectus  or  written  communication  (other  than  transmittal  letters, comments  to filings or other immaterial correspondence) in respect thereof filed by the Company or any of its subsidiaries with or received by the Company or any of its subsidiaries in connection therewith from any securities exchange or the Securities Exchange Commission.
(e)       At least thirty (30) days prior to any Tax Distribution, the Company shall deliver to Holder  a  calculation  in  reasonable  detail  prepared  by Malone  & Bailey or other independent  public accountants  of  recognized  national  standing acceptable  to Holder of the amount of such Tax Distributions.

(f)        Promptly following receipt or preparation thereof, copies of any reserve reports or estimates with respect to the Company's and its subsidiaries oil and gas properties.
In addition to the foregoing, not fewer than 15 days prior to a Change of Control, written notice of the tem1s of such transaction in reasonable detail, which will result in  such Change of Control , including the amount and type of anticipated Change of Control Consideration.
Section 4.        Termination.  This Agreement shall terminate upon the earlier of (a) the complete liquidation, dissolution and winding up of the Company, or (b) closing and funding of a Change of Control, so long as in each of (a) and (b) any Participation Amount due as a result of such transaction shall have been paid in full.
Section 5.        Restrictions.  The Company shall not incur any indebtedness for borrowed money to Members or Affiliates of Members or enter into any other agreements  with Members of Affiliates of Members, without the consent of Holder, unless the terms of such indebtedness or other  agreements  arc  on  an  arms-length basis,  in  the ordinary  course of  business  of  the Company and on fair and reasonable terms no less favorable to the Company  than the Company would obtain in a comparable transaction with a Person not an Affiliate of the Company.
Section 6.        Board Observation Rights.   The Holder shall be entitled to have one or more observers (the "Agent Observers") attend any regular meeting of the Members of the Borrower. The Agent Observers shall not be entitled to vote on matters presented to or discussed by the Members of the Borrower at any such meeting.  The Agent Observers shall be timely notified of the time and place of any such meeting and will be given written notice of all proposed actions to be taken by the Members of the Borrower at any such meeting as if the Agent Observers were members of the Members of the Borrower. Such notice shall describe in reasonable detail the nature and substance of the matters to he discussed and/or voted upon at any such meeting (or the proposed actions to be taken by written consent without a meeting).  The Agent Observers shall have the right to receive all information provided to the members of the Members of the Borrower in anticipation of or at any such meeting, in addition to copies of the records of the proceedings or minutes of any such meeting, when provided to the members of the Members of the Borrower. The  Borrower  shall  reimburse  the  Agent  Observers  for  all  reasonable  and documented out-of-pocket costs and expenses incurred in connection with their participation  in any such  meeting. The  Agent Observers  shall  also have the  right to receive all  information provided to each member of the Board of Directors of each Subsidiary (if any) of the Borrower (the "Other  Boards"), in anticipation of or at all meetings thereof (whether regular or special and whether  telephonic or Otherwise), in addition  to copies of the records of  the proceedings  or minutes of such meetings, when provided to the members of such Other Boards.  The Borrower will also furnish or will cause to be furnished to Administrative Agent and its counsel a copy of each written consent without a meeting adopted by the Members of the Borrower or any of the Other Boards not later than five (5) days after it has been signed by the last signatory thereto. The Members of the Borrower shall hold a regularly scheduled meeting at least quarterly.  The Borrower shall cause an amendment to its organizational documents to effect this schedule if necessary.  ln addition, the Company shall schedule, and the Holder shall be entitled to have one or more  observers  (the  ''Operator  Observers")  attend,  a formal  planning meeting  each  fiscal quarter between the Company and the Eagle Operating, Inc., as provided for in the Acquisition Documents  (as defined  in  the Credit Agreement). The Operator  Observers  shall  be  timely notified  of  the time  and place  of  any such meeting  and  will be given  written  notice of  all proposed agenda items.  Such notice shall describe in reasonable detail the nature and substance of the matters to be discussed and/or voted upon at any such meeting.  The Operator Observers shall have the right to receive all information provided to the Company in anticipation of or at any such meeting including, reserve reports, seismic information, authorizations for expenditure, well logs, unit plans and design 

documents.  The Company shall reimburse the Operator Observers for all reasonable and documented out-of-pocket costs and expenses incurred in connection with their participation in any such meeting.
Section 7.    Tax Treatment of Payments.
(a)       Solely  for  tax  purposes,   the   Holder's   rights  to  receive  the  Equity Participation   Amount   and  the  Charge  of  Control   Participation  Amount   pursuant  to  this Agreement shall be treated as a membership interest in the Company.
(b)     If-in any year, the Holder receives payments with respect to the Equity Participation  Amount or the Change of Control  Participation Amount,  such  Holder shall  be allocated an amount of gross income equal to the amount of such payments, provided, however, that in the event the Company does not have adequate gross income to allocate such amounts to such  Holder in such  year, then, in subsequent  years,  before any  income is allocated  to any Members of the Company, an amount of gross income shall be allocated to the Holder until such Holder has received allocations of gross income in a cumulative amount equal to the amount of such payments.   No such allocations of income to Holder shall cause Holder to have a capital account, nor give Holder any rights to Membership property other than as provided elsewhere herein, or in the Credit Agreement or other Loan Documents, as such are defined in the Credit Agreement.  Such  allocation  to Holder  shall  not  give the Holder  any  capital  account  or  rights except as expressly provided  herein to any other amounts from the Partnership.
(c)        For purposes  of Section  704(a)  of the Internal  Revenue  Code  of  1986,  as amended, the allocation  provisions set forth in paragraph (b) of this Section  7 shall  be treated  as part of the LLC Agreement  of the Company.

Section  8.     Miscellaneous.
(a)        No Third Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.
(b)        Entire Agreement. This Agreement constitutes the entire agreement among the Parties with   regard to the subject matter hereof and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they related in any way to the subject matter hereof.
(c)        No Partnership, Agency, Etc. The relationship created hereby between the Company and Holder hereunder   is contractual.   Except  as  provided  in  Section  7(a),  nothing herein   shall   be  deemed   to  create   a  partnership,  agency,   independent  contractor  or  other relationship between  the parties for any purpose.   Nothing herein shall entitle Holder to rights as a Partner of the Company.
(d)        Succession and Assignment.   This  Agreement shall  be binding  upon  and inure  to the  benefit  of  the  Parties  and  their  respective successors and  permitted  assigns.    The Company may  not  assign  either  this  Agreement  or  any of  its  rights,  interests  or  obligations hereunder  without  the prior written approval  of Holder.
(e)        Counterparts.  This   Agreement    may   be executed    in   one   or   more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.
(f)      Governing Law.  This  Agreement  shall  be construed in accordance with and  this Agreement and  any disputes  or  controversies related  hereto  shall  be governed by the domestic laws of the State  of New 

York  without  giving  effect  to any choice  or conflict of Jaw provision or rule that would mandatorily  apply the laws of any other jurisdiction.
(g)        Amendments and Waivers.   No  amendment  of  any   provision  of  this Agreement shall  be  valid  unless  the same  shall  be in writing  and  signed  by  each  Party. No waiver  by any  Party  of any default  or covenant  hereunder, whether  intentional or not, shall  be deemed  to extend  to any prior or subsequent default  or covenant  hereunder or affect  in any way any rights arising by virtue of any prior or subsequent such occurrence.
(h)       Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
(i)        Specific Performance.  Each of the Parties acknowledges and agrees that, to the extent permitted by law, the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in any material respect in accordance with their specific terms or otherwise are breached.   Accordingly, each of the Parties agrees that, to the extent permitted by applicable law, the other Parties shall be entitled to an injunction or injunctions  (including temporary restraining orders and  preliminary  injunctions)  to  prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the Parties and the matter, in addition to any other remedy  to which they may be entitled, at law or in equity.
Q)       Savings Clause.    No action by Holder under this Agreement, and no express or implied term of this Agreement, shall be deemed to constitute an amendment, waiver of any of Holder's rights or benefits under the Credit Agreement, or any other Loan Documents (as defined in the Credit Agreement), or consent by Holder under the Credit Agreement or any of the other Loan Documents to any action that would otherwise be restricted under the Credit Agreement or any of the other Loan Documents.  Any such waiver or consent shall occur only pursuant to the express terms of the Credit Agreement.

[Signature page follows]

SIGNATURE PAGE TO
PARTICIPATION AGREEMENT (DBZ)

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.

SIGNATURE PAGE TO
PARTICIPATION AGREEMENT (DBZ)

D. B. ZWIRN SPECIAL OPPORTUNITIES
FUND, L.P.crmd_ex424.htm

Exhibit 4.24

 

PURSUANT TO THE TERMS OF SECTION 1 OF THIS WARRANT, ALL OR A PORTION OF THIS WARRANT MAY HAVE BEEN EXERCISED, AND THEREFORE THE ACTUAL NUMBER OF WARRANT SHARES REPRESENTED BY THIS WARRANT MAY BE LESS THAN THE AMOUNT SET FORTH ON THE FACE HEREOF.

CORMEDIX INC.

Warrant To Purchase Common Stock

Warrant No.:                                             

Number of Shares of Common Stock: _____________

Date of Issuance: March __, 2014 (“Issuance Date”)

CorMedix Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [INVESTOR NAME], the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, upon surrender of this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after [the six month anniversary of] the Issuance Date (the “Exercisability Date”), but not after 11:59 p.m., New York time, on the Expiration Date (as defined below), [______________ (_____________)] fully paid nonassessable shares of Common Stock (the “Warrant Shares”).  Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in Section 15.  This Warrant is the Warrant to Purchase Common Stock (this “Warrant”) issued pursuant to (i) the Subscription Agreement, dated as of March 4, 2014 (the “Subscription Date”), by and between the Company and the Holder (the “Subscription Agreement”) and (ii) the Company’s Registration Statement on Form S-3 File No.: 333-185737).  This Warrant is one of a series of warrants containing substantially identical terms and conditions issued pursuant to subscription agreements that are substantially identical to the Subscription Agreement (collectively, the “Warrants”).

 

1. EXERCISE OF WARRANT.

 

(a) Mechanics of Exercise.  Subject to the terms and conditions hereof, this Warrant may be exercised by the Holder on any day on or after the Exercisability Date, in whole or in part (but not as to fractional shares), by delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”) of the Holder’s election to exercise this Warrant. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Within two (2) Trading Days of the delivery of such Exercise Notice, if the Holder is not electing a Cashless Exercise (as defined below) pursuant to Section 1(d) of this Warrant, the Holder shall pay to the Company an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or wire transfer of immediately available funds (a “Cash Exercise”).  The Holder shall not be required to surrender this Warrant in order to effect an exercise hereunder; provided, however, that in the event that this Warrant is exercised in full or for the remaining unexercised portion hereof, the Holder shall deliver this Warrant to the Company for cancellation within a reasonable time after such exercise.  On or before the first Trading Day following the date on which the Company has received the Exercise Notice (the date upon which the Company has received the Exercise Notice, the “Exercise Date”), the Company shall transmit by facsimile or e-mail transmission an acknowledgment of confirmation of receipt of the Exercise Notice to the Holder and the Company’s transfer agent for the Common Stock (the “Transfer Agent”). The Company shall deliver any objection to the Exercise Notice on or before the second Trading Day following the date on which the Company has received the Exercise Notice.  On or before the second Trading Day following the date on which the Company has received the Exercise Notice, provided the Aggregate Exercise Price has been received by the Company prior to such Trading Day if the Holder is not electing a Cashless Exercise (the “Share Delivery Date”), the Company shall, (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program (the “FAST Program”) and so long as the certificates therefor are not required to bear a legend regarding restriction on transferability (because (A) the Holder is effecting an exercise for cash, and (B) a registration statement registering the issuance of the Warrant Shares under the Securities Act of 1933, as amended (the “Securities Act”), is effective and available for the issuance of the Warrant Shares, or an exemption from registration under the Securities Act is available for the issuance of the Warrant Shares), upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y), if the Transfer Agent is not participating in the FAST Program or if the certificates are required to bear a legend as set forth above regarding restrictions on transferability, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise.  Upon delivery of the Exercise Notice and payment of the Aggregate Exercise Price, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares, as the case may be.  If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three Trading Days after any such submission and at its own expense, issue a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant has been and/or is exercised.  The Company shall pay any and all taxes and other expenses of the Company (including overnight delivery charges) that may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder or an affiliate thereof.  The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

 

  

1

  

(b) Exercise Price.  For purposes of this Warrant, “Exercise Price” means $3.10, subject to adjustment as provided herein.

 

(c) Company’s Failure to Timely Deliver Securities.  If the Company shall fail for any reason or for no reason to issue to the Holder within three (3) Business Days of the Exercise Date a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or to credit the Holder’s balance account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise of this Warrant, and if on or after such Trading Day the Holder purchases, or another Person purchasers on the Holder’s behalf or for the Holder’s account (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days after the Holder’s written request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Warrant Shares) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Warrant Shares and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the date of exercise.

 

(d) Cashless Exercise.  Notwithstanding anything contained herein to the contrary, if a registration statement covering the Warrant Shares that are the subject of the Exercise Notice (the “Unavailable Warrant Shares”), or an exemption from registration, is not available for the resale of such Unavailable Warrant Shares, the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

 

Net Number = (A x B) - (A x C)

B

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which this Warrant is then being exercised.

 

B= the arithmetic average of the Closing Sale Prices of the shares of Common Stock for the five (5) consecutive Trading Days ending on the date immediately preceding the date of the Exercise Notice.

 

C= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

(e) Rule 144.  For purposes of Rule 144(d) promulgated under the Securities Act, as in effect on the date hereof, assuming the Holder is not an affiliate of the Company, it is intended that the Warrant Shares issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Subscription Agreement.

 

(f) Disputes.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed.

 

(g) Beneficial Ownership.  The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, such Person (together with such Person’s affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately after giving effect to such exercise.  For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Person and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein.  Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  For purposes of this Warrant, in determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in the most recent of (1) the Company’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  For any reason at any time, upon the written or oral request of the Holder, the Company shall within two (2) Business Days confirm to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(g) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

  

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2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

 

(a) Voluntary Adjustment by Company.  The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

 

(b) Adjustment upon Subdivision or Combination of Common Stock.  If the Company at any time on or after the Subscription Date subdivides (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be proportionately increased.  If the Company at any time on or after the Subscription Date combines (by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately decreased.  Any adjustment under this Section 2(b) shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

(c) Other Events.  If any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights or phantom stock rights), then the Company’s Board of Directors will make an appropriate adjustment in the Exercise Price and the number of Warrant Shares so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Section 2(c) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2.

 

3. RIGHTS UPON DISTRIBUTION OF ASSETS.

 

(a) If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common Stock (and not to the Holders) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the Weighted Average Price determined as of the record date mentioned above, and of which the numerator shall be such Weighted Average Price on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith.  In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.  Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

4. PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a) Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

 

(b) Fundamental Transactions.  The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing (unless the Company is the Successor Entity) all of the obligations of the Company under this Warrant in accordance with the provisions of this Section (4)(b) pursuant to written agreements in form and substance reasonably satisfactory to the Required Holders and approved by the Required Holders prior to such Fundamental Transaction, including agreements to deliver to each holder of the Warrants in exchange for such Warrants a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, an adjusted exercise price equal to the value for the shares of Common Stock reflected by the terms of such Fundamental Transaction, and exercisable for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and reasonably satisfactory to the Required Holders. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. Upon consummation of the Fundamental Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any time after the consummation of the Fundamental Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of the publicly traded common stock or common shares (or its equivalent) of the Successor Entity (including its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Warrant been converted immediately prior to such Fundamental Transaction, as adjusted in accordance with the provisions of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the Corporate Event but prior to the Expiration Date, in lieu of shares of Common Stock (or other securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Corporate Event, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of such Corporate Event had this Warrant been exercised immediately prior to such Corporate Event. Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Required Holders. The provisions of this Section 4(b) shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied without regard to any limitations on the exercise of this Warrant.

 

  

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(c) Black Scholes Value. Notwithstanding the foregoing and the provisions of Section 4(b) above, in the event of the consummation of a Fundamental Transaction that is (1) an all-cash transaction, (2) a "Rule 13e-3 transaction" as defined in Rule 13e-3 under the Exchange Act or (3) a Fundamental Transaction involving a person or entity not traded on an Eligible Market, at the request of the Holder delivered at any time commencing on the earlier to occur of (x) the public disclosure of the Fundamental Transaction or (y) the consummation of the Fundamental Transaction, through the date that is ninety (90) days after the public disclosure of the consummation of such Fundamental Transaction by the Company pursuant to a Current Report on Form 8-K filed with the SEC, the Company or the Successor Entity (as the case may be) shall purchase this Warrant from the Holder on the later of (i) the date of consummation of the Fundamental Transaction and (ii) the fifth Trading Day following the date of such request, in each case by paying to the Holder cash in an amount equal to the Black Scholes Value.

(d) Applicability to Successive Transactions.   The provisions of this Section shall apply similarly and equally to successive Fundamental Transactions and Corporate Events and shall be applied without regard to any limitations on the exercise of this Warrant.

 

5. NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith comply with all the provisions of this Warrant and take all actions consistent with effectuating the purposes of this Warrant.  Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as this Warrant is outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of this Warrant, 100% of the number of shares of Common Stock issuable upon exercise of this Warrant then outstanding (without regard to any limitations on exercise).

 

6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER.  Except as otherwise specifically provided herein, the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant.  In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

7. REISSUANCE OF WARRANTS.

 

(a) Transfer of Warrant.  If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company and deliver the completed and executed Assignment Form, in the form attached hereto as Exhibit B, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less then the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

(b) Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.

 

(c) Exchangeable for Multiple Warrants.  This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional shares of Common Stock shall be given.

 

(d) Issuance of New Warrants.  Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.

 

  

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8. NOTICES.  The Company shall provide Holder with prompt written notice of all actions taken pursuant to this Warrant. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in writing, will be mailed (a) if within the domestic United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile or (b) if delivered from outside the United States, by International Federal Express or facsimile, and (c) will be deemed given (i) if delivered by first-class registered or certified mail domestic, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed and (iv) if delivered by facsimile, upon electronic confirmation of receipt, and will be delivered and addressed as follows:

 

(i)           if to the Company, to:

CorMedix Inc.

745 Route 202-206, Suite 303

Bridgewater, NJ 08807

Attn: Randy Milby, Chief Executive Officer

Facsimile: (908) 429-4307

with a copy to:

Wyrick Robbins Yates & Ponton LLP

2101 Lake Boone Trail, Suite 300

Raleigh, NC 27607

Attn:           Alexander M. Donaldson

Facsimile: (919) 781-4865

(ii) if to the Holder, at the address of the Holder appearing on the books of the Company.

9. AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Holders.  Any such amendment shall apply to all Warrants and be binding upon all registered holders of such Warrants.

 

10. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.  This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of New York, without reference to the choice of law provisions thereof.  The Company and, by accepting this Warrant, the Holder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant.  The Company and, by accepting this Warrant, the Holder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  The Company and, by accepting this Warrant, the Holder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE HOLDER HEREBY WAIVES 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.

 

11. CONSTRUCTION; HEADINGS.  This Warrant shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any person as the drafter hereof.  The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

 

12. DISPUTE RESOLUTION.  In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder.  If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder, which approval shall not be unreasonably withheld, or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant.  The Company shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the time it receives the disputed determinations or calculations.  The prevailing party (which, for purposes of this Warrant, is the party whose determinations or calculations is closest to those of the investment bank or the accountant, as the case may be) in any dispute resolved pursuant to this Section 12 shall be entitled to the full amount of all reasonable expenses, including all costs and fees paid or incurred in good faith, in relation to the resolution of such dispute.  Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

 

  

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13. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure by the Company to comply with the terms of this Warrant.

 

14. TRANSFER.  Subject to applicable laws, this Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company

 

15. CERTAIN DEFINITIONS.  For purposes of this Warrant, the following terms shall have the following meanings:

 

(a) “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg using (i) a price per share of Common Stock equal to the Weighted Average Price of the Common Stock for the Trading Day immediately preceding the date of consummation of the applicable Fundamental Transaction, (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of the date of consummation of the applicable Fundamental Transaction and (iii) an expected volatility equal to the greater of 100% and the 30 day volatility obtained from the HVT function on Bloomberg determined as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction.

 

(b)  “Bloomberg” means Bloomberg Financial Markets.

 

(c) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

(d) “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the OTC Pink marketplace maintained by OTC Markets Group Inc.  If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the Company and the Holder.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

(e) “Common Stock” means (i) the Company’s shares of Common Stock, par value $0.001 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

(f)  “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

 

(g) “Eligible Market” means the Principal Market, The New York Stock Exchange, Inc., The NASDAQ Global Market, The NASDAQ Global Select Market or The NASDAQ Capital Market.

 

(h) “Expiration Date” means the fifth (5th) anniversary of the Exercisability Date or, if such date falls on a day other than a Trading Day or on which trading does not take place on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded (a “Holiday”), the next date that is not a Holiday.

 

(i)  “Fundamental Transaction” means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person (but excluding a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company), or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), (v) reorganize, recapitalize or reclassify its Common Stock, or (vi) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock.

 

  

6

  

(j)  “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

(k) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

(l) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

(m) “Principal Market” means the NYSE MKT.

 

(n) “Required Holders” means, as of any date, the holders of at least a majority of the Warrants outstanding as of such date.

 

(o) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

(p) “Trading Day” means any day on which the Common Stock are traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock are then traded; provided that “Trading Day” shall not include any day on which the Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock are suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

 

(q) “Weighted Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” function or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the OTC Pink marketplace maintained by OTC Markets Group Inc. If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12 with the term “Weighted Average Price” being substituted for the term “Exercise Price.” All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

[Signature Page Follows]

 

  

7

  

 

IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

 

	 	

CORMEDIX INC.

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 

  

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 EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

CORMEDIX INC.

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of CorMedix Inc., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).  Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

1.  Form of Exercise Price.  The Holder intends that payment of the Exercise Price shall be made as:

	
  

	
____________

	
a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

	
  

	
____________

	
a “Cashless Exercise” with respect to _______________ Warrant Shares.

2.  Payment of Exercise Price.  In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

3.  Delivery of Warrant Shares.  The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant and, after delivery of such Warrant Shares, _____________ Warrant Shares remain subject to the Warrant.

Date: _______________ __, ______

                                                                    

   Name of Registered Holder

 

	By: 	 	 
	 	

Name:

	 	

Title:

 

  

A-1

  

 

 EXHIBIT B

ASSIGNMENT FORM

 

CORMEDIX INC.

 

(To assign the foregoing Warrant, execute this form and supply required information.  Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

	
Name:

	 	  
	  	
(Please Print)

	
Address:

	 	  
	  	
(Please Print)

	
Dated: _______________ __, ______

	  
	
Holder’s Signature:                                                               

	  
	
Holder’s Address:                                                               

	  

 

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

B-1

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