Document:

ex101.htm

Exhibit 10.1

 

FINANCIAL ADVISORY AGREEMENT

This Agreement is made and entered into as of the 24th day of March, 2010, between Pimi Agro Cleantech, Inc., a Delaware corporation (the "Company") and Lampost Capital L.C., a Florida limited liability company (the "Financial Advisor").

W I T N E S S E T H :

WHEREAS, The Company is seeking certain financial advice regarding business and  financing activities; and

WHEREAS, the Financial Advisor is willing to furnish certain business and financial related advice and services to the Company on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual terms and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1.           Purpose.  The Company hereby engages the Financial Advisor on a non-exclusive basis for the term specified in this Agreement to render financial advisory consulting advice to the Company relating to financial and similar matters upon the terms and conditions set forth herein.

2.           Representations of the Financial Advisor.  The Financial Advisor represents and warrants to the Company that:

a)           Financial Advisor has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  This Agreement constitutes the valid and legally binding obligation of the Financial Advisor, enforceable in accordance with its terms.

b)           Financial Advisor is (i) a limited liability company duly  organized, validly existing and in good standing under the laws of the State of Florida; (ii) duly registered as a broker-dealer in accordance with the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; (iii) a member in good standing of the Financial Industry Regulatory Authority ("FINRA") and is duly and lawfully engaged in the securities brokerage business; and (iv) in addition to its securities brokerage business, provides financial and business consulting advisory services.

c)           Financial Advisor is free to enter into this Agreement and the services to be provided pursuant to this Agreement are not in conflict with any other contractual or other obligation to which the Financial Advisor is bound.  The Company acknowledges that the Financial Advisor is in the securities business and may provide financial services and consulting advice (of the type contemplated by this Agreement) to others and that nothing herein contained shall be construed to limit or restrict the Financial Advisor in providing financial services to others, or rendering such advice to others.

3.           Representations of the Company.  The Company represents and warrants to the Financial Advisory that:

a)           The Company has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  This Agreement constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms.

b)           The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

 

  

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4.           Duties of the Financial Advisor.  During the term of this Agreement, the Financial Advisor will provide the Company with consulting advice as specified below at the request of the Company, provided that the Financial Advisor shall not be required to undertake duties not reasonably within the scope of the consulting advisory service in which the Financial Advisor is engaged generally.  In performance of these duties, the Financial Advisor shall provide the Company with the benefits of its best judgment and efforts, and the Financial Advisor cannot and does not guarantee that its efforts will have any impact on the business of the Company or that any subsequent improvement will result from the efforts of the Financial Advisor.  It is understood and acknowledged by the parties that the value of the Financial Advisor's advice is not measurable in any quantitative manner, and that the amount of time spent rendering such consulting advice shall be determined according to the Financial Advisor's discretion.

The Financial Advisor's duties may include, but will not necessarily be limited to, rendering the following services to the Company:

a)           Study and review the business, operations, historical financial performance of the Company (based upon management's forecast of financial performance) so as to enable the Financial Advisor to provide advice to the Company;

b)           Assist the Company in attempting to formulate the optimum strategy to meet the Company's working capital and capital resources needs during the period of this Agreement;

c)           Assist in the introduction of the Company to institutional or other capital financing sources;

d)           Assist the Company in issues of capital formation, including but not limited to advice and assistance in connection with listings on domestic and foreign exchanges, stock buybacks, splits, dividends, issuing new securities, stock loans, and venture financing such as private investments in public enterprises (“PIPEs”);

e)           Assist in the formulation of the terms and structure of any reasonable proposed equity or debt financing or business combination transaction involving the Company;

f)           Assist in any presentation to the Board of Directors of the Company, as requested, in details of any proposed transaction;

g)           Advise the Company as to the expected reaction of the financial community to any transaction and other matters, and assist in determining the optimum means of communicating the pertinent aspects, such as strategic considerations, benefits to the Company and financial impact, to the financial community; and

h)           Assist the Company in the development of increased market awareness to and among securities research analysts, and broker dealer/investment banking conferences.  Financial Advisor shall sponsor and network the Company at a National Investment Banking Association capital conference in an effort to create such increased awareness.

5.           Effective Date, Term and Termination.  This Agreement shall be effective as of March 1, 2010 and will continue until December 31, 2010. This ten (10) month Agreement can only be extended and otherwise modified by mutually consent and in writing.  The Company shall have the right to terminate the Services without cause at any time upon written notice to Financial Advisor, in which case there will be no refund of any fees paid to Financial Advisor. Financial Advisor shall have the right to terminate the Services at any time upon written notice to Company, and will refund any fee collected for the remainder of the term on a pro-rata basis unless Financial Advisor terminated for specific cause.

6.           Option to Renew and Extend.  The Company and Financial Advisor may renew the term of this Agreement on terms to be mutually agreed upon in writing, including the possibility of a month-to-month renewal.

7.           Financial Advisory Fee. Upon the execution of this Agreement, the Company shall issue to the Financial Advisor and/or persons designated by the Financial Advisor (“holder”) 30,000 shares of the Company’s Common Stock (the “Shares”) in consideration for the Financial Advisory services rendered hereunder.

The Shares shall not have been registered under the Securities Act of 1933, as amended (the "Act"), and the certificates representing the Shares shall bear the following legend:

The securities represented by this certificate may not be offered or sold except pursuant to (i) an effective registration statement under the Act, (ii) to the extent applicable, Rule 144 under the Act (or any similar rule under such Act relating to the disposition of securities), or (iii) an opinion of counsel that an exemption from registration under such Act and applicable state securities laws is available.

 

 

  

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8.           Financing Fee.  In the event the Financial Advisor effects, introduces, or otherwise participates in effecting a Financing by the Company in a private or public debt and/or equity transaction, pursuant to which the Company obtains financing or other consideration, the Financial Advisor shall receive a Financing Fee in addition to the Financial Advisory Fee and any other fee to be received pursuant to this Agreement, which shall be mutually determined between the Company and the Financial Advisor at the time of any such Financing.

9.           Transaction Finder's Fee.  In the event the Financial Advisor introduces to the Company another party or entity, and that as a result of such introduction, a transaction between such entity and the Company is consummated (“Transaction”), then the Company shall pay to the Financial Advisor a Transaction Finder's Fee as follows:

	
  

	
a.

	
Five percent (5%) of the first $1,000,000 of the consideration paid in such transaction;

	
  

	
b.

	
Four percent (4%) of the consideration in excess of $1,000,000 and up to $2,000,000;

	
  

	
c.

	
Three percent (3%) of the consideration in excess of $2,000,000 and up to $3,000,000;

	
  

	
d.

	
Two percent (2%) of any consideration in excess of $3,000,000 and up to $4,000,000; and

	
  

	
e.

	
One percent (1%) of any consideration in excess of $4,000,000.

The Finder's Fee due the Financial Advisor shall be paid by the Company in cash and/or in securities at the closing of the Transaction as mutually agreed between the Company and the Financial Advisor, without regard to whether the Transaction involves payments in cash, securities, or a combination of securities and cash, or is made on an installment sale basis.  By way of example, if the Transaction involved securities of the acquiring entity (whether securities of the Company, if the Company is the acquiring party, or securities of another entity, if the Company is the selling party) having a value of $5,000,000, the consideration to be paid by the Company to the Financial Advisor at closing shall be $150,000.

In the event that for any reason the Company shall fail to pay to the Financial Advisor all or any portion of the Finder's Fee payable hereunder when due, interest shall accrue and be payable on the unpaid balance due hereunder from the date when first due through and including that date when actually collected by the Financial Advisor, at a rate equal to two (2) points over the prime rate as stated in the Wall Street Journal, computed on a daily basis and adjusted as announced from time to time.

Notwithstanding anything herein to the contrary, if the Company shall, within 180 days immediately following the termination of this Agreement, conclude a Transaction with any party introduced by the Financial Advisor to the Company prior to the termination of this Agreement, the Company shall also pay the Financial Advisor the Finder's Fee determined above.

10.           Expenses. In addition to the fees payable hereunder, the Company shall reimburse the Financial Advisor, within five (5) business days of its request, for any and all reasonable pre-approved out-of-pocket expenses incurred in connection with the services performed by the Financial Advisor pursuant to this Agreement, including (i) reasonable hotel, food and associated expenses incurred in connection with performing due diligence of the Company; (ii) reasonable charges for travel; (iii) reasonable long-distance telephone calls; and (iv) other reasonable expenses spent or incurred on the Company's behalf.

11.           Use of Advice by the Company; Public Market for the Company's Securities.  The Company acknowledges that all opinions and advice (written or oral) given by the Financial Advisor to the Company in connec­tion with the engagement of the Financial Advisor are intended solely for the benefit and use of the Company in considering the transaction to which they relate, and the Company agrees that no person or entity other than the Company shall be entitled to make use of or rely upon the advice of the Financial Advisor to be given hereunder, and no such opinion or advice shall be used for any other purpose or reproduced, disseminated, quoted or referred to at any time, in any manner or for any purpose, nor may the Company make any public references to the Financial Advisor, or use of the Financial Advisor's name in any annual reports or any other reports or releases of the Company without the prior written consent of the Financial Advisor.

 

The Company acknowledges that the Financial Advisor makes no commit­ment whatsoever as to making a public trading market in the Company's securities or to recommending or advising its clients to purchase the Company's securities.  The Company hereby represents and acknowledges that any payment made pursuant to this agreement is not compensation for the purpose of making a market in the Company's securities or to cover out-of-pocket expenses for making a market in the Company's securities or for submitting an application to make a market in the Company's securities.  Research reports or corporate finance reports that may be prepared by the Financial Advisor will, when and if prepared, be done solely on the merits or judgment and analysis of the Financial Advisor or any senior corporate finance personnel of the Financial Advisor.

12.           Company Information.  The Company recognizes and confirms that, in advising the Company and in fulfilling its engagement hereunder, the Financial Advisor will use and rely on data, material and other information furnished to the Financial Advisor by the Company.  The Company shall provide reasonable access to information, excluding any material non-public information, and to the officers and financial management of the Company necessary for performance by the Financial Advisor of the services to be performed.  The Company acknowledges and agrees that in performing its services under this engagement, the Financial Advisor may rely upon the data, material and other information supplied by the Company without independently verifying the accuracy, completeness or veracity of same.  In addition, in the performance of its services, the Financial Advisor may look to such others for such factual information, economic advice and/or research upon which to base its advice to the Company hereunder as the Financial Advisor shall in good faith deem appropriate.  The parties further acknowledge that the Financial Advisor undertakes no responsibility for the accuracy of any statements to be made by Company management contained in press releases or other communications, including, but not limited to, filings with the Securities and Exchange Commission and FINRA.

 

  

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13.  The Financial Advisor as an Independent Contractor.  The Financial Advisor shall perform its services hereunder as an independent contractor and not as an employee of the Company or an affiliate thereof.  The Financial Advisor and the Company acknowledge that neither the Financial Advisor nor any of its officers or employees is an officer, director or agent of the Company; it is not, and will not be, responsible for any management decisions on behalf of the Company; and may not commit the Company to any action; and Company shall have no obligation to accept or act upon any advice or service provided under this Agreement except as expressly set forth in this Agreement. The Company represents that Financial Advisor does not have, through stock ownership or otherwise, the power either to control the Company, or to exercise any dominating influences over its management. Financial Advisor understands and acknowledges that this Agreement shall not create or imply any agency relationship among the parties, and Financial Advisor will not commit the Company in any manner except when a commitment has been specifically authorized in writing by the Company. The Company and Financial Advisor agree that the relationship among the parties shall be that of independent contractor.

14.           Indemnification.  In the performance of its services, the Financial Advisor shall be obligated to act only in good faith, and shall not be liable to the Company for errors in judgment not the result of willful misconduct.  The Company shall indemnify and hold harmless the Financial Advisor against any and all liabilities, claims, lawsuits, including any and all awards and/or judgments to which it may become subject under the Act, the Securities Exchange Act of 1934, as amended (the "1934 Act") or any other federal or state statute, at common law or otherwise, insofar as said liabilities, claims and lawsuits (including costs, expenses, awards and/or judgments) arise out of or are in connection with the services rendered by the Financial Advisor or any transactions in connection with this Agreement, except for any liabilities, claims and lawsuits (including awards and/or judgments), arising out of willful misconduct or willful omissions of the Financial Advisor.  In addition, the Company shall also indemnify and hold harmless the Financial Advisor against any and all reasonable costs and expenses incurred relating to the foregoing.

The Financial Advisor shall give the Company prompt notice of any such liability, claim or lawsuit which the Financial Advisor contends is the subject matter of the Company's indemnification and the Company thereupon shall be granted the right to take any and all necessary and proper action, at its sole cost and expense, with respect to such liability, claim and lawsuit, including the right to settle, compromise and dispose of such liability, claim or lawsuit, excepting therefrom any and all proceedings or hearings before any regulatory bodies and/or authorities.

15.           Miscellaneous.

(a)           This Agreement between the Company and the Financial Advisor constitutes the entire agreement and understanding of the parties hereto, and supersedes any and all previous agreements and understandings, whether oral or written, between the parties with respect to the matters set forth herein.

(b)           Any notice or communication permitted or required hereunder shall be in writing and shall be deemed sufficiently given if hand-delivered or sent postage prepaid by certified or registered mail, return receipt requested, to the respective parties as set forth below, or to such other address as either party may notify the other in writing:

If to the Company:                  Youval Saly, CEO

Pimi Agro Cleantech, Inc.

269 South Beverly Drive, Suite 1091

Beverly Hills, CA 90212

If to the Financial Advisor:                                                Michael Meade, President

Lampost Capital, L.C.

7777 West Glades Road, Suite 213

Boca Raton, Florida 33434

(c)           This Agreement shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors, legal representatives and assigns.

(d)           This Agreement may be executed in any number of counterparts, each of which together shall constitute one and the same original document.

(e)           No provision of this Agreement may be amended, modified or waived, except in a writing signed by all of the parties hereto.

 

  

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(f)           The Agreement shall be governed by and construed in accordance with the laws of the State of Florida without regard to the conflict of laws provision thereof.  The parties jointly agree that any and all disputes arising from this Agreement shall be resolved in a binding arbitration proceeding before the American Arbitration Association (the “AAA”) and presided over by a qualified three (3) person arbitration panel in accordance with the AAA’s Commercial Rules of Arbitration.  The venue for any arbitration proceeding shall be located in Boca Raton, Florida, or such other location as mutually agreed upon by the parties.

(g)           This Agreement or any section thereof shall not be construed against any party due to the fact that said Agreement or any section thereof was drafted by said party.

(h)           All section or paragraph titles or captions in this Agreement are for convenience only and shall not be deemed part of the context nor affect the interpretation of this Agreement.

(i)           All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the Person or Persons may require.

(j)           The parties hereto shall execute and deliver all documents, provide all information and take or avoid all actions necessary or appropriate to achieve the purposes of this Agreement.

(k)           If any provision of this Agreement, or the application of such provision, shall be held invalid, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

(l)           This Agreement may not be assigned by either party hereto without the written consent of the other, but shall be binding upon the successors of the parties.

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written.

 

	
COMPANY:

 

PIMI AGRO CLEANTECH, INC. 

 

	 	 	
FINANCIAL ADVISOR:

 

LAMPOST CAPITAL, L.C.

	 
	
By: /s/ Youval Saly   

	 	 	
By: /s/ Michael S. Meade 

	 
	
Youval Saly   

	 	 	
Michael S. Meade

	 
	
Its: Chief Executive officer

	 	 	

Its: Chief Executive Officer

	 

 

6ex42.htm

Exhibit 4.2

 

Warrant No. 4

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS REGISTERED UNDER THE SECURITIES ACT AND QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND THE QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.  THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF HOLDERS THEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER RESTRICTIONS, AND THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY FUTURE HOLDERS) IS BOUND BY THE TERMS OF A SUBSCRIPTION AGREEMENT BETWEEN THE ORIGINAL PURCHASER AND THE COMPANY (COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY).

 

REDEEMABLE WARRANT TO PURCHASE SHARES

OF COMMON STOCK OF CARDIMA, INC.

 

This certifies that ______________ (the “Holder”), for value received is entitled to purchase from Cardima, Inc., a Delaware corporation (the “Company”), _________________ fully paid and nonassessable shares of the Company’s Common Stock (the “Warrant Shares”) at a price of $ ___ per share (the “Stock Purchase Price”) at any time or from time to time on or after the Commencement Date (as defined below) up to and including 5:00 p.m. (Pacific time) on the Expiration Date (as defined below), upon surrender to the Company at its principal office at 47266 Benicia Street, Fremont, California 94538 (or at such other location as the Company may advise Holder in writing) of this Warrant properly endorsed with the Form of Subscription attached hereto duly filled in and signed and upon payment by cash, cashier’s check or wire transfer of immediately available funds of the aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof, such exercise to be conditioned upon the accuracy of all representations and warranties contained in such Form of Subscription.  The Stock Purchase Price and the number of shares purchasable hereunder are subject to adjustment as provided in Section 3 of this Warrant.  “Commencement Date” means the date which is six (6) months after June 4, 2008, representing the date of issuance of this Warrant and “Expiration Date” means the earlier of (i) five (5) years from the date hereof, (ii) the occurrence of an event, proposal of which is described in subsection (d) of Section 3.4 which causes termination of this Warrant under Section 3.4, or (iii) on the date specified in the Notice of Redemption (as defined below) pursuant to Section 7.  This Warrant is issued pursuant to the Subscription Agreement between the Company and Holder dated as of the date hereof (the “Subscription Agreement”).

 

This Warrant is subject to the following terms and conditions:

 

1.           Exercise of Warrant

 

1.1           Issuance of Certificates

 

This Warrant is exercisable at the option of Holder at any time or from time to time on or after the Commencement Date and prior to or on the Expiration Date for all or a portion of the shares of Warrant Shares which may be purchased hereunder but if this Warrant is to be exercised only in part, not for less than the greater of (a) twenty-five (25%) of the number of Warrant Shares which may initially be purchased hereunder or (b) one thousand (1,000) Warrant Shares (in either case as adjusted for any stock dividend, split, combination, recapitalization or the like with respect to such shares).  The Company agrees that the Warrant Shares purchased under this Warrant shall be and are deemed to be issued to Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares.  Subject to the provisions of Section 2, certificates for the Warrant Shares so purchased, together with any other securities or property to which Holder is entitled upon such exercise, shall be delivered to Holder by the Company’s transfer agent at the Company’s expense within a reasonable time after this Warrant has been exercised.  Each stock certificate so delivered shall be in such denominations of Warrant Shares as may be requested by Holder and shall be registered in the name of Holder or such other name as shall be designated by Holder, subject to the limitations contained in Section 2.  If, upon exercise of this Warrant, fewer than all of the Warrant Shares evidenced by this Warrant are purchased prior to the date of expiration of this Warrant, one or more new warrants substantially in the form of, and on the terms in, this Warrant will be issued for the remaining number of Warrant Shares not purchased upon exercise of this Warrant.

 

  

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1.2           Payment

 

.  Payment of the Stock Purchase Price shall be made by surrender to the Company of this Warrant properly endorsed with the Form of Subscription attached hereto duly filled in and signed and payment by cash, cashier’s check or wire transfer of immediately available funds and specifying the number of Warrant Shares to be purchased, during normal business hours on any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of California.

 

2.           Shares to be Fully Paid; Reservation of Shares

 

The Company covenants and agrees that all Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any stockholder and free of all taxes, liens and charges with respect to the issue thereof.  The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will use its best efforts to at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of this Warrant, a sufficient number of shares of authorized but unissued Common Stock.  When and as required to provide for the exercise of the rights represented by this Warrant, the Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange or automated quotation system upon which the Common Stock may be listed.

 

3.           Adjustment of Stock Purchase Price; Number of Shares

 

The Stock Purchase Price and the number of shares of Warrant Shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 3.

 

3.1           Adjustment of Purchase Price

 

In the event that the Company at any time or from time to time after the issuance of this Warrant shall declare or pay, without consideration, any dividend on the Common Stock payable in Common Stock or in any right to acquire Common Stock for no consideration, or shall effect a subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock split, reclassification or otherwise than by payment of a dividend in Common Stock or in any right to acquire Common Stock), or in the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then the Stock Purchase Price in effect immediately prior to such event shall, concurrently with the effectiveness of such event, be proportionately decreased or increased, as appropriate.  In the event that the Company shall declare or pay, without consideration, any dividend on the Common Stock payable in any right to acquire Common Stock for no consideration, then the Company shall be deemed to have made a dividend payable in Common Stock in an amount of shares equal to the maximum number of shares issuable upon exercise of such rights to acquire Common Stock.  Upon each adjustment of the Stock Purchase Price pursuant to this Section 3.1, the holder of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of shares of Common Stock obtained by multiplying the Stock Purchase Price in effect immediately prior to such adjustment by the number of shares of Common Stock purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Stock Purchase Price resulting from such adjustment.

 

3.2           Adjustments for Reclassification and Reorganization

 

If the Common Stock shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares provided for in Section 3.1), the Stock Purchase Price then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted so that this Warrant shall represent the right to purchase, in lieu of the number of shares of Common Stock which this Warrant would otherwise represent the right to purchase, a number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock which this Warrant would have otherwise entitled the holder to purchase immediately before that change.

 

3.3           Notice of Adjustment

 

Upon any adjustment of the Stock Purchase Price or any increase or decrease in the number of shares of Common Stock purchasable upon the exercise of this Warrant, the Company shall within five business days give written notice thereof, by first class mail, postage prepaid, (or by international delivery service, for international addresses) addressed to the registered holder of this Warrant at the address of such holder as shown on the books of the Company.  The notice shall be signed by the Company’s chief financial officer and shall state the Stock Purchase Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

 

3.4           Certain Termination Events; Other Notices

 

If at any time the Company shall propose to:

 

(a) declare any cash dividend upon its Common Stock;

 

(b) declare or make any dividend or other distribution to the holders of its Common Stock, whether in cash, property or other securities;

 

(c) effect any reorganization or reclassification of the capital stock of the Company or any consolidation or merger of the Company with or into another corporation or any sale, lease or conveyance of all or substantially all of the property of the Company; or

 

(d) effect a voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

  

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then, in any one or more of said cases, the Company shall give, by certified or registered mail, postage prepaid, or international delivery service for international deliveries, addressed to the holder of this Warrant at the address of such holder as shown on the books of the Company, (i) at least fifteen (15) business days’ prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend or distribution or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, lease, conveyance, dissolution, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, lease, conveyance, dissolution, liquidation or winding up, at least fifteen (15) business days’ written notice of the date when the same shall take place.  Any notice given in accordance with clause (i) above shall also specify, in the case of any such dividend or distribution, the record date for such dividend or distribution, if after the Commencement Date.  Any notice given in accordance with clause (ii) above shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property, if any, deliverable upon such reorganization, reclassification, consolidation/merger, sale, lease, conveyance, dissolution, liquidation or winding up, as the case may be and in connection with the occurrence of an event described in clause (d) above such notice shall specify the anticipated net equity value that will accrue to Common Stock holders so that the Holder can make an informed decision whether or not to exercise this Warrant.  In the event that the Holder of the Warrant does not exercise this Warrant prior to the occurrence of an event described in clause (a) or (b) above, the Holder shall not be entitled to receive the benefits accruing to existing holders of the Common Stock in such event.  Upon the occurrence of an event described in clause (c) in which the holders of the Company’s voting securities of the Company immediately prior to the event do not hold at least fifty percent (50%) of the voting securities of the Company or the surviving entity (in a sale of assets, the Company shall be the surviving entity) resulting from such event immediately after such event, this Warrant shall terminate unless the Company has negotiated (which it is under no obligation to do) for the assumption of this Warrant.  Upon the occurrence of an event described in clause (c) and, subject to the immediately preceding sentence, the Holder shall be entitled thereafter, upon payment of the Stock Purchase Price in effect immediately prior to such action, to receive upon exercise of this Warrant the class and number of shares which the Holder would have been entitled to receive after the occurrence of such event had this Warrant been exercised immediately prior to such event.  In connection with the transactions described in clause (c) and provided that this Warrant does not terminate as provided in the second sentence immediately preceding this sentence, the Company will require each person (other than the Company) that may be required to deliver any cash, stock, securities or other property upon the exercise of this Warrant as provided herein to assume, by written instrument delivered to the Holder of this Warrant (x) the obligations of the Company under this Warrant and (y) the obligation to deliver to such Holder such cash, stock, securities or other property as such Holder may be entitled to receive in accordance with the provisions of this Section 3. Upon the occurrence of an event the proposal of which is described in clause (d), this Warrant shall terminate.  Notwithstanding any other provision hereof, no Holder shall have the right to obtain an injunction or restraining order or otherwise interfere with or prevent the occurrence of any of the actions described in (a) - (d) above.

 

3.5           Adjustment of Number of Warrant Shares

 

The number of Warrant Shares purchasable hereunder shall be reduced on a one-for-one basis by the number of shares of Common Stock (or Common Stock equivalents) sold directly or indirectly, including, without limitation, any short sale, third party short sales or holdings of a “put equivalent position” (as defined in Rule 16a-1 of the 1934 Act), of the Company’s Common Stock by the Holder from the date hereof until the Commencement Date.  Prior to or simultaneously with the first exercise of this Warrant by the Holder (or the transfer of this Warrant), the Holder shall provide the Company with an affidavit and other reasonable supporting materials as to the foregoing.

 

4.           Issue Tax

 

The issuance of certificates for the Warrant Shares upon the exercise of the Warrant shall be made without charge to the Holder of the Warrant for any issue tax in respect thereof; 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 issuance and delivery of any certificate in a name other than that of the then Holder of the Warrant being exercised.

 

5.           No Voting or Dividend Rights; Limitation of Liability

 

Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote or to consent or to receive notice as a stockholder in respect of meetings of stockholders for the election of directors of the Company or any other matters or any rights whatsoever as a stockholder of the Company.  Except for the adjustment to the Stock Purchase Price pursuant to Section 3.1 in the event of a dividend on the Common Stock payable in shares of Common Stock, no dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised.  No provisions hereof, in the absence of affirmative action by the Holder to purchase shares of Warrant Shares, and no mere enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the Stock Purchase Price or as a stockholder of the Company whether such liability is asserted by the Company or by its creditors.

 

 

6.           Restrictions on Transferability of Securities: Compliance with Securities Act

 

.

 

6.1           Restrictions on Transferability

 

The Warrant and the Warrant Shares (collectively, the “Securities”) shall not be transferable except upon the conditions specified in the Subscription Agreement, which conditions are intended to insure compliance with the provisions of the Securities Act and applicable “blue sky” law.

 

6.2           Restrictive Legend

 

Each certificate representing the Securities or any other securities issued in respect of the Securities upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of the Subscription Agreement) be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state securities laws):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS REGISTERED UNDER THE SECURITIES ACT AND QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND THE QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS AND THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.  THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF HOLDERS THEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER RESTRICTIONS, AND THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY FUTURE HOLDERS) IS BOUND BY THE TERMS OF A SUBSCRIPTION AGREEMENT BETWEEN THE ORIGINAL PURCHASER AND THE COMPANY (COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY).

 

  

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6.3           Exchange of Warrant

 

Subject to the terms and conditions hereof, including the restrictions on transfer in this Section 6 and in the Subscription Agreement, upon surrender of this Warrant to the Company with a duly executed Assignment Form in the form attached hereto and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant or Warrants of like tenor in the name of the assignee named in such Assignment Form and this Warrant shall promptly be canceled; provided, however, that if the transfer is for less than all of this Warrant, the transferor shall pay all reasonable costs of the Company in connection with a transfer of Warrants to purchase less than the greater of (a) twenty-five percent (25%) of the Warrant Shares which may initially be purchased hereunder or (b) one thousand (1,000) Warrant Shares (in either case as adjusted for any stock dividend, split, combination, recapitalization or the like with respect to such shares).  The term “Warrant” as used herein shall be deemed to include any Warrants issued in exchange for this Warrant.

 

6.4           Ownership of Warrant

 

The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration of transfer as provided in Section 6.3.

 

7.           Forced Exercise by the Company.                                                                

 

At the option of the Company, the Company may force the Holder to exercise the Warrant at a price per share equal to $0.65, provided that (i) the average closing bid price of the Company’s Common Stock as reported by the National Association of Securities Dealers Automated Quotation or the OTC Bulletin board shall have been equal to or greater than $____ for a period of fifteen (15) consecutive trading days ending on the date preceding the date on which the Holder receives a notice from the Company in which it announces its intention to force the exercise of the Warrants and (ii) a registration statement is in effect with respect to the Warrant Shares.  Upon Holder receipt of said notice, the Holder shall have fifteen (15) Trading Days [This term is not defined] to submit to the Company a completed Form of Subscription, together with a check for full payment in accordance with the provisions of this Warrant.  If the Company does not receive payment within said time period, this Warrant shall expire immediately and the Holder shall have no further rights hereunder.

 

8.           Modification and Waiver

 

Except as otherwise provided herein, this Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.

 

9.           Notices

 

Except as otherwise provided herein, any notices and other communications 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) upon electronic confirmation of successful facsimile transmission, (c) three (3) days after deposit with the United States mail, by registered or certified mail, postage prepaid, or (d) one (1) business day after timely delivery to an overnight air courier for next business day delivery, in each case addressed (i) if to the Subscriber, at the address set forth on the signature to the Subscription Agreement or at such other address as the Subscriber shall have furnished the Company in writing, or (ii) if to the Company, at its address set forth in the Subscription Agreement, or at such other address as the Company shall have furnished to the Subscriber in writing.

 

10.           Descriptive Headings and Governing Law

 

The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant.  This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California (without regard to its conflicts of law provisions).  The Holder hereby irrevocably submits to the jurisdiction of any State or United States Federal court sitting in the Alameda or San Francisco counties in the State of California over any action or proceeding arising out of or relating to this Warrant or any agreement contemplated hereby, and the Holder irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such State or Federal court.  The Holder further waives any objection to venue in such State and any objection to an action or proceeding in such State based on non-convenient forum.  The Holder further agrees that any action or proceeding brought against the Company shall be brought in the State or United States Federal courts sitting in Alameda or San Francisco counties in the State of California. The Holder agrees to waive its rights to a jury trial or any claim for cause of action based upon or arising out of this Warrant or any document or agreement contemplated hereby.

 

11.           Lost Warrants or Stock Certificates

 

The Company represents and warrants to Holder that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of any Warrant or stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity and, if requested, bond reasonably satisfactory to the Company, or, in the case of any such mutilation, upon surrender and cancellation of such Warrant or stock certificate, the Company at its expense will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.

 

12.           Amendment

 

This Warrant is one of a series of warrants (the “Warrant Series”) to purchase in the aggregate up to three million six hundred thousand (3,600,000) shares of the Company’s Common Stock.  This Warrant may be amended only with the written approval of the Company and (i) the Holder of this Warrant or (ii) the holders of warrants representing a majority of the Warrant Shares; provided, however, that any amendment affected pursuant to (ii) above shall be made in the same manner to all warrants in the Warrant Series.

 

13.           Binding Effect; Benefits

 

This Warrant shall inure to the benefit of and shall be binding upon the Company and the Holder and their respective heirs, legal representatives, successors and assigns.  Nothing in this Warrant, expressed or implied, is intended to or shall confer on any person other than the Company and the Holder, or their respective heirs, legal representatives, successors or assigns, any rights, remedies, obligations or liabilities under or by reason of this Warrant.

 

14.           Fractional Shares

 

No fractional shares shall be issued upon exercise of this Warrant.  The Company shall, in lieu of issuing any fractional share, pay the Holder entitled to such fraction a sum in cash equal to such fraction multiplied by the market price of the Common Stock on such exercise date, which shall be, on such date, the closing price for the Common Stock or the closing bid if no sales were reported, as quoted on the exchange or market that is the primary trading market for the Company.

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officers, thereunto duly authorized this ____ day of September, 2008.

 

CARDIMA, INC., a Delaware corporation

By:                                                                           

Name: ____________________________

Title: _____________________________

 

 

  

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FORM OF SUBSCRIPTION

(To be signed only upon exercise of Warrant)

To:           Cardima, Inc.

 

The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise such Warrant for, and to purchase thereunder, ________________ (________) shares of Common Stock of [_____________] Inc. (the “Company”), and herewith makes payment in the amount of $________ therefor.  The certificates for such shares should be issued in the name of, and delivered to, ________________ whose address is ________________________________ __________________________________________________________.

 

The undersigned represents, unless the exercise of this Warrant has been registered under the Securities Act of 1933, as amended (the “Securities Act”), that (i) the undersigned is acquiring such Common Stock for his or its own account for investment and not with a view to or for sale in connection with any distribution thereof (except for any resale pursuant to a registration statement under the Securities Act), (ii) the undersigned has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the undersigned’s investment in the shares of Common Stock, (iii) the undersigned has received all of the information the undersigned requested from the Company and the undersigned considers necessary or appropriate for deciding whether to purchase the shares, (iv) the undersigned has the ability to bear the economic risks of the undersigned’s prospective investment and (v) the undersigned is able, without materially impairing his financial condition, to hold the shares of Common Stock for an indefinite period of time and to suffer complete loss on the undersigned’s investment.

 

The undersigned is an “accredited investor” as defined in Regulation D of the Securities and Exchange Commission on the date hereof.

 

DATED:                                                                

 

_______________________________________

(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

_______________________________________

_______________________________________

(Address)

 

  

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THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT.

 

ASSIGNMENT FORM

(To be executed only upon transfer of this Warrant)

For value received, the undersigned registered holder of the within Warrant hereby sells, assigns and transfers unto ____________________ (the “Assignee”) the right represented by such Warrant to purchase __________ Warrant Shares and all other rights of the Holder with respect thereto under the within Warrant, and appoints _________________ as Attorney to make such transfer on the books of Cardima, Inc. maintained for such purpose, with full power of substitution in the premises.

 

The undersigned also represents that, by assignment hereof, the Assignee acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are being acquired for investment and that the Assignee will not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws.  Further, the Assignee has acknowledged that upon exercise of this Warrant, the Assignee shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares so purchased are being acquired for investment and not with a view toward distribution or resale.

 

Dated:  ____________________.

 

	
[MEDALLION GUARANTEE]

	
______________________________

(Signature)

 

______________________________

(Print Name)

 

______________________________

(Street Address)

 

______________________________

(City)                  (State)        (Zip Code)

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