Document:

exv10w4

 

Exhibit 10.4

SECURED
CONVERTIBLE PROMISSORY NOTE

      

			
	$530,000
	 	March 24, 2005

     FOR VALUE RECEIVED, the undersigned, Sutura, Inc., a Delaware corporation (the “Maker”),
hereby promises to pay to the order of Whitebox Hedged High Yield Partners, L.P., a British Virgin
Islands limited partnership, or its assigns (the “Payee”), at such place as the Payee may designate
in writing, the principal sum of Five Hundred Thirty Thousand Dollars ($530,000) under the terms
set forth herein. This Note is one of a series of three Notes being issued by Maker on the date
hereof.

1. Interest. The unpaid principal balance hereof from time to time outstanding shall bear interest
from the date hereof at the rate of eight percent (8%) per annum.

2. Payment. Subject to earlier mandatory prepayment under Section 5 below or any default hereunder,
the principal and interest hereof is payable as follows:

     (a) Interest only is payable in cash quarterly in arrears on the last day of each of June,
September and December 2005 and each of March, June, and September 2006; and

     (b) On September 18, 2006, the entire outstanding principal balance of this Note will be due
in a single lump sum together with all then accrued, but unpaid interest (including any then
accrued, but unpaid Contingent Additional Interest, as defined below).

     (c) In the event that, after the date hereof, Maker consummates its proposed merger (the
“Merger”) into Technology Visions Group, Inc., a Delaware corporation (“TVG”), pursuant to an
Agreement and Plan of Merger dated November 22, 2004 (the “Merger Agreement”) and thereafter fails

          (i) by the 150th day after the effective date of the Merger to file a registration statement
(the “Payee Registration Statement”) under the Securities Act of 1933, as amended (the “Securities
Act”) pursuant to Section 2.1 of an Amended Registration Rights Agreement of this date among Maker,
Payee and others (the “Amended Registration Rights Agreement”), and/or

          (ii) within seven (7) months after the effective date of the Merger to obtain effectiveness
under the Securities Act and applicable state securities laws of the Payee Registration Statement,

then for each full month (prorated for partial months) that either or both of these failures
continue (as aggregated together, the “Failure Term”), Maker shall pay in arrears in cash, with
each next otherwise scheduled payment under Sections 2(a) or (b) above (or if the last scheduled
payment under Section 2(b) has been made, then on the same day of each succeeding month),

 

 

additional interest (the “Contingent Additional Interest”) at a rate equal to 0.75% per month of
the Failure Term thereafter, of the original principal balance of this Note.

     (d) Except as provided by Section 5 below, the Maker will have no right of early prepayment of
this Note.

3. Conversion.

     (a) At any time while any portion of the principal or interest of this Note is
outstanding, the Payee may give the Maker written notice (the “Payee Notice”) of its intention to
convert all or any portion of the outstanding principal and/or accrued but unpaid interest on this
Note into shares of the Maker’s Common Stock based on a conversion rate as described below (the
“Conversion Rate”). Upon receipt of the Payee Notice, the Maker shall immediately cause
certificates dated the Payee Notice date and representing these shares to be delivered to Payee
within 20 days of, and payment shall be deemed to have been made on, the date of the Payee Notice.

     (b) Prior to the earlier of (i) the effective date of the proposed Merger of the Maker into
TVG pursuant to the Merger Agreement (at which time this Note and the rights and obligations of
Maker hereunder shall be assigned to and assumed by TVG and thereafter the term “Maker” shall mean
and refer to TVG) or (ii) the date that Maker or its controlling stockholders enter into any
definitive agreement (other than the Merger Agreement) relating to the sale, license or other
disposition of all or substantially all of the Maker’s assets, the sale or exchange of a majority
of the voting stock of Maker or the merger or consolidation of Maker into or with any other entity
(a “Sale Transaction,” with the date of the definitive agreement for the Sale Transaction being the
“Sale Agreement Date”), the Conversion Rate shall be computed as follows:

CR = $150,000,000 / N, where

“CR” is the Conversion Rate and

“N” is the number of shares of Common Stock of Maker outstanding on the date of the Payee
Notice, assuming the exercise or conversion of all then outstanding options, warrants or
other rights to acquire shares of Maker’s Common Stock or securities convertible or
exchangeable for Common Stock (or convertible or exchangeable for securities themselves
convertible or exchangeable for Common Stock), but without assuming (i) the conversion of
this Note or any other Notes that are part of this Series (together, the “Series Notes”)
or (ii) the exercise of warrants to purchase Common Stock of Maker being issued
contemporaneously herewith to the Payee and to the other holders of Notes in this Series
(together, the “Series Warrants”).

     (c) The Conversion Rate from and after the effective date of the Merger shall be computed as
follows:

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CR = the greater of:

          (i) $150,000,000 / “New N” (as defined below) or

          (ii) the average closing bid price (rounded to the nearest $0.01 per share) for
TVG Common Stock (“Maker’s New Common Stock”) on a national stock exchange, on the Nasdaq system or
on the OTC Bulletin Board (as applicable) for the 20 trading days preceding the Payee Notice (the
“Testing Period”), all as reported by bigcharts.com (or if this service is discontinued, such other
reporting service acceptable to Payee). If during the Testing Period, TVG effects a stock split or
dividend, reverse split or combination or other recapitalization or reorganization of or relating
to its outstanding Common Stock (a “TVG Reorganization Transaction”), then in computing the average
closing bid price for TVG Common Stock, a proportional adjustment shall be made to the reported
closing bid prices for those trading days during the Testing Period prior to the effective date of
the TVG Reorganization Transaction.

“New N” is the number of shares of Maker’s New Common Stock outstanding as of the close of
business on trading day immediately preceding the Payee Notice, assuming the exercise of
all then outstanding options, warrants or other rights to acquire shares of Maker’s New
Common Stock or securities convertible or exchangeable for Maker’s New Common Stock (or
convertible or exchangeable for securities themselves convertible or exchangeable for
Maker’s New Common Stock), but without assuming (i) the conversion of the Series Notes or
(ii) the exercise of the Series Warrants.

     (d) If Maker or its controlling stockholders enter into a definitive agreement relating to a
Sale Transaction (whether prior to or after consummating the Merger), then from and after the Sale
Agreement Date, the Conversion Rate shall be the lesser of the rate computed pursuant to the above
provisions or the per-share price as computed pursuant to the terms of the definitive agreement;
provided, however, that if the Sale Transaction is ultimately not consummated (whether upon
termination or abandonment of the definitive agreement or otherwise), then from and after the date
that Maker gives Payee notice thereof, the provisions of this subsection (e) shall become
inapplicable (unless and until Maker or its controlling stockholders enter into a different
definitive agreement relating to a Sale Transaction, whereupon, each time, this subsection shall
again become applicable).

     (e) The Conversion Rate (and, as applicable, the factors above used to compute it) shall be
adjusted proportionally for any subsequent stock dividend or split, stock combination or other
similar recapitalization, reclassification or reorganization of or affecting Maker’s Common Stock
or Maker’s New Common Stock (including any such event occurring on or after the date hereof and
prior to consummation of the Merger. In case of any consolidation or merger to which the Maker is
a party (including the Merger) other than a merger or consolidation in which the Maker is the
continuing corporation, or in case of any sale or conveyance to another corporation of the property
of the Maker as an entirety or substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any exchange

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effected in connection with a merger of a third corporation into the Maker), then instead of
receiving shares of Maker’s Common Stock, Payee shall have the right thereafter to receive the kind
and amount of shares of stock and other securities and property which the Payee would have owned or
have been entitled to receive immediately after such consolidation, merger, statutory exchange,
sale or conveyance had the same portion of this Note been paid or converted immediately prior to
the effective date of such consolidation, merger, statutory exchange, sale or conveyance and, in
any such case, if necessary, appropriate adjustment shall be made in the application of the
provisions set forth in this Section with respect to the rights and interests thereafter of the
Payee, to the end that the provisions set forth in this Section shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, in relation to any shares of stock and other
securities and property thereafter deliverable in connection with this Note. The provisions of this
subsection shall similarly apply to successive consolidations, mergers, statutory exchanges, sales
or conveyances.

4. Security. The full and timely payment of this Note, together with the Maker’s obligations under
a Purchase Agreement of this date among Maker, Payee and others (the “Purchase Agreement”) shall be
secured by an Amended Security Agreement (including the Amended Patent and Trademark Security
Agreement attached thereto) of this date (all together, the “Amended Security Agreement”) covering
all of Maker’s assets. The security interest granted under the Amended Security Agreement shall be
a first priority security interest subordinate to no other secured rights, but shared with the
other holders of the Series Notes and the holders of a series of notes (the “September 2004 Series
Notes”) sold pursuant to a Purchase Agreement dated September 17, 2004 (the “September 2004
Purchase Agreement”).

5. Mandatory Prepayments. If Maker or its controlling stockholders enter into a definitive
agreement relating to a Sale Transaction, the Maker shall give Payee at least fifteen days prior
written notice of the proposed date for consummation of the Sale Transaction. The Maker’s notice
shall include a description of the proposed price, terms and conditions of the Sale Transaction.
Despite any other provisions hereof, the entire principal balance of this Note, and all accrued but
unpaid interest (including any Contingent Additional Interest), shall be due and payable
immediately prior to (and as a condition of) the closing on the Sale Transaction. However, within
fifteen days after receipt of Maker’s notice, Payee may give written notice to Maker that Payee
elects to convert all or any portion of the outstanding principal and/or accrued but unpaid
interest on this Note into shares of the Maker’s Common Stock (in which case, the Payee’s notice
will constitute a Payee Notice under Section 3 above and the portion of this Note not so converted
will be retired in cash as otherwise provided in this Section).

     The Maker shall not consummate any Sale Transaction, the price, terms and conditions of which
materially deviate from those described in Maker’s notice to the Payee, without first giving the
Payee a new notice specifying such changes. Such new notice will commence a new 15-day period
during which time Payee may give its notice
to Maker as provided above. Nothing in this Section will restrict the Maker’s ability to
effect a Sale Transaction if Maker complies with the foregoing provisions hereof.

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6. Default. The occurrence of any one or more of the following events shall constitute an event of
default, upon which Payee may declare the entire principal amount of this Note, together with all
accrued but unpaid interest (including any Contingent Additional Interest), to be immediately due
and payable:

     (a) The Maker shall fail to make any required payment of principal or interest (including
Contingent Additional Interest) when due, and such failure shall continue through five days after
Payee gives written notice of such failure to Maker.

     (b) The Maker shall be in material default of any term or provision of the Purchase Agreement,
the Amended Security Agreement, the Amended Registration Rights Agreement or the Warrant being
issued on the date hereof by Maker to Payee (the “Warrant”), and such failure shall continue
through five days after Payee gives written notice of such default to Maker. Despite the foregoing,
a failure by Maker to timely file the Payee Registration Statement and obtain its effectiveness
under the Securities Act will not, without Maker’s subsequent failure to timely pay Contingent
Additional Interest, constitute an event of default under this subsection (b).

     (c) The Maker fails to give Payee the notice(s) required by, or consummates a Sale Transaction
in violation of, Section 5 above.

     (d) The Maker shall become insolvent or any bankruptcy, reorganization, debt arrangement or
other proceeding under any bankruptcy or insolvency law shall be instituted by or against the
Maker.

     (e) Any representation or warranty of the Maker contained in the Purchase Agreement, the
Security Agreement, the Registration Rights Agreement or the Warrant shall be untrue in any
material respect, or Maker shall fail to materially comply with any covenants or agreements of
Maker contained in any of the foregoing.

     (f) The Maker incurs an event of default under the terms of any of the other Series Notes, any
of the September 2004 Series Notes, or any note issued after the date hereof by the Maker pursuant
to the Purchase Agreement.

     Without limiting the above, the Maker acknowledges that payments on the various scheduled due
dates in Sections 2, and prepayment as required by Section 5, are of essence and that any failure
to timely pay any installment of principal or interest (within any permitted grace period above),
including Contingent Additional Interest, permits Payee to declare this Note immediately due in
cash in its entirety without any prior notice of any kind to Maker, except for the specific notices
provided above.

7. Applicable Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF
THE NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS PRINCIPLES THEREOF.

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8. Waivers. The Maker hereby waives presentment for payment, notice of dishonor, protest and
notice of payment and all other notices of any kind in connection with the enforcement of this
Note.

9. No Setoffs. The Maker shall pay principal and interest under the Note without any deduction for
any setoff or counterclaim.

10. Costs of Collection. If this Note is not paid when due, the Maker shall pay Payee’s reasonable
costs of collection, including reasonable attorney’s fees.

	 	 	 	 	 	 	 
	 	 	SUTURA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Anthony A. Nobles, President and	 	 
	 

	 	 	 	Chief Executive Officer	 	 

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Exhibit
10.5

WARRANT NO. 2004-2

To Purchase Shares of Common Stock

of

SUTURA, INC.

     This Warrant and the Securities issuable upon exercise of this Warrant have not been
registered under the Securities Act of 1933 (the “1933 Act”) or under any state securities or “Blue
Sky” laws (“Blue Sky Laws”). No transfer, sale, assignment, pledge, hypothecation or other
disposition of this Warrant or the Securities issuable upon exercise of this Warrant or any
interest therein may be made except (a) pursuant to an effective registration statement under the
1933 Act and any applicable Blue Sky Laws or (b) if the Corporation has been furnished with an
opinion of counsel for the holder, which opinion and counsel shall be reasonably satisfactory to
the Corporation, to the effect that no registration is required because of the availability of an
exemption from registration under the 1933 Act and applicable Blue Sky laws.

     THIS CERTIFIES THAT, for good and valuable consideration Whitebox Hedged High Yield Partners
L.P., a British Virgin Islands limited partnership (the “Holder”), or the Holder’s registered
assigns, is entitled to subscribe for and purchase from Sutura, Inc., a Delaware corporation (the
“Corporation”), at any time on or after September 17, 2004, to and including September 17, 2009,
the number of fully paid and nonassessable shares of the Common Stock of the Corporation computed
below at the price per share computed below (the “Warrant Exercise Price”), subject to the
anti-dilution and price protection provisions of this Warrant.

     The shares which may be acquired upon exercise of this Warrant are referred to herein as the
“Warrant Shares.” As used herein, the term “Holder” means the Holder, any party who acquires all or
a part of this Warrant as a registered transferee of the Holder, or any record holder or holders of
the Warrant Shares issued upon exercise, whether in whole or in part, of the Warrant. The term
“Common Stock” means the common stock, $0.00025 par value per share, of the Corporation.

     This Warrant is subject to the following provisions, terms and conditions:

1. Computing the Number of Warrant Shares.

     (a) Initial Computation. Prior to the earliest of (i) March 1, 2005 or (ii) the effective
date of the proposed merger (the “Merger”) of the Corporation into Millenium Holding Group, Inc., a
Nevada corporation (“Millenium”), pursuant to an Agreement and Plan of Merger dated July 9, 2004
(the “Merger Agreement”), the number of Warrant Shares that the Holder may acquire upon the full
exercise hereof (subject to adjustment as otherwise provided by this Warrant) shall be computed as
follows:

WS = (D / 2) / ($250,000,000 / N), where

“WS” is the number of Warrant Shares that may be purchased pursuant to this Warrant,

 

 

“D” is $2,000,000, being the original dollar amount of a Secured Convertible
Promissory Note issued by the Corporation to the Holder hereof contemporaneously
with the issuance hereof (the “Note”) and

“N” is the number of shares of Common Stock of the Corporation outstanding on the date of
the original issuance of this Warrant, assuming the exercise or conversion of all then
outstanding options, warrants or other rights to acquire shares of the Corporation’s
Common Stock or securities convertible or exchangeable for Common Stock (or convertible or
exchangeable for securities themselves convertible or exchangeable for Common Stock), but
without assuming (i) the conversion of the Note or any other Secured Convertible
Promissory Notes that are part of the same series (together, the “Series Notes”) or (ii)
the exercise of this Warrant or warrants issued to the other holders of Series Notes
(together, the “Series Warrants”). Notwithstanding the foregoing, “N” shall not include
any shares of the Corporation’s Common Stock or (or shares of Common Stock issuable upon
conversion of Preferred Stock) issuable upon conversion of (x) a Convertible Promissory
Note issued to Al Novak in the principal amount of $1.0 million or (y) a Convertible
Promissory Note issued to Oasis Corporation and assigned to Bruce Burrows in the principal
amount of $2.0 million.

     (b) Computation Without Merger. If on or before February 28, 2005, the
Corporation has not consummated the Merger into Millenium pursuant to the Merger Agreement,
the number of Warrant Shares that the Holder may acquire upon the full exercise hereof (subject to
adjustment as otherwise provided by this Warrant) from and after March 1, 2005 shall be computed as
follows:

WS = D / ($100,000,000 / N).

     (c) Computation With Merger. If on or before February 28, 2005, the Corporation consummates
the Merger into Millenium pursuant to the Merger Agreement, the number of Warrant Shares that the
Holder may acquire upon the full exercise hereof (subject to adjustment as otherwise provided by
this Warrant) from and after the effective date of the Merger shall be computed as follows:

WS = the lesser of:

          (i) (D / 2) / ($250,000,000 / “New N”), where “New N” is the number of shares of Millenium
Common Stock outstanding on the effective date of the Merger immediately after the consummation
thereof, assuming the exercise of all then outstanding options, warrants or other rights to acquire
shares of Millenium Common Stock or securities convertible or exchangeable for Millenium Common
Stock (or convertible or exchangeable for securities themselves convertible or exchangeable for
Millenium Common Stock), but without assuming (i) the conversion of the Series Notes or (ii) the
exercise of the Series Warrants

          or

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          (ii) (D / 2) / “AP,” where “AP” is the average closing bid price (rounded to the nearest $0.01
per share) for Millenium Common Stock (“Millenium Common Stock”) on a national stock exchange, on
the Nasdaq system or on the OTC Bulletin Board (as applicable) for the 20 trading days preceding
the effective date of the Merger (the “Testing Period”), all as reported by bigcharts.com (or if
this service is discontinued, such other reporting service acceptable to the Holder). If during the
Testing Period, Millenium effects a stock split or dividend, reverse split or combination or other
recapitalization or reorganization of or relating to its outstanding Common Stock (a “Millenium
Reorganization Transaction”), then in computing the average closing bid price for Millenium Common
Stock, a proportional adjustment shall be made to the reported closing bid prices for those trading
days during the Testing Period prior to the effective date of the Millenium Reorganization
Transaction. The “AP” computed pursuant to the foregoing is referred to below as the “Millenium
AP.”

2. Computing the Warrant Exercise Price.

     (a) Initial Computation. Prior to the earliest of (i) March 1, 2005 or (ii) the effective
date of the Merger into Millenium pursuant to the Merger Agreement, the Warrant
Exercise Price per share shall be computed as follows (subject to adjustment as otherwise provided
by this Warrant):

WP = $250,000,000 / N, where “WP” is the Warrant Exercise Price.

     (b) Computation Without Merger. If on or before February 28, 2005, the Corporation has not
consummated the Merger into Millenium pursuant to the Merger Agreement, the Warrant Exercise Price
from and after March 1, 2005 shall be computed as follows (subject to adjustment as otherwise
provided by this Warrant):

WP = $100,000,000 / N.

     (c) Computation With Merger. If on or before February 28, 2005, the Corporation consummates
the Merger into Millenium pursuant to the Merger Agreement, the Warrant Exercise Price from and
after the effective date of the Merger shall be computed as follows (subject to adjustment as
otherwise provided by this Warrant):

WP = the lesser of:

(i) $250,000,000 / New N or

(ii) the Millenium AP.

     (d) Post-Merger Special Adjustment of Warrant Exercise Price. If the Corporation consummates
the Merger into Millenium pursuant to the Merger Agreement (whether before, on or after February
28, 2005), and if at the date which is one year after the effective date of the Merger (the “Second
Testing Date”), there remains any portion of this Warrant unexercised, the Warrant Exercise Price
applicable to one-half of the then remaining Warrant Shares shall adjust downward (but not upward)
to equal the average closing bid price (rounded to the nearest $0.01 per share) for Millenium
Common Stock on a national stock exchange, on the Nasdaq system or on the OTC Bulletin Board (as
applicable) for the 60 trading days preceding the Second Testing

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Date (the “Second Testing Period”), all as reported by bigcharts.com (or if this service is
discontinued, such other reporting service acceptable to the Holder). If during the Second Testing
Period, Millenium effects a Millenium Reorganization Transaction, then in computing the average
closing bid price for Millenium Common Stock, a proportional adjustment shall be made to the
reported closing bid prices for those trading days during the Second Testing Period prior to the
effective date of the Millenium Reorganization Transaction.

     (e) Sale Transaction. If the Corporation or its controlling stockholders enter into a
definitive agreement (whether prior to or after consummating the Merger) relating to the sale,
license or other disposition of all or substantially all of the Corporation’s assets, the sale or
exchange of a majority of the voting stock of the Corporation or the merger or consolidation of
Maker into or with any other entity other than Millenium (a “Sale Transaction,” with the date of
the definitive agreement for the Sale Transaction
being the “Sale Agreement Date”), then from and after the Sale Agreement Date, the Warrant
Exercise Price shall be the lesser of the applicable Warrant Exercise Price computed pursuant to
the above provisions or the per-share price as computed pursuant to the terms of the definitive
agreement; provided, however, that if the Sale Transaction is ultimately not consummated (whether
upon termination or abandonment of the definitive agreement or otherwise), then from and after the
date that the Corporation gives the Holder notice thereof, the provisions of this subsection (e)
shall become inapplicable (unless and until the Corporation or its controlling stockholders enter
into a different definitive agreement relating to a Sale Transaction, whereupon, each time, this
subsection shall again become applicable).

3. Exercise for Cash or on Cashless Basis; Transferability.

     (a) The rights represented by this Warrant may be exercised by the Holder hereof, in
whole or in part (but not as to a fractional share of Common Stock), by written notice of exercise
(in the form attached hereto) delivered to the Corporation at the principal office of the
Corporation prior to the expiration of this Warrant and accompanied or preceded by the surrender of
this Warrant along with a check in payment of the Warrant Exercise Price for such Warrant Shares.

     (b) In the alternative, payment may be made at the option of Holder by instructing the
Corporation to withhold from the shares of Common Stock to be issued upon exercise of this Warrant
a number of whole or fractional shares of Common Stock equal to the number of shares for which the
Warrant is being exercised (including any shares to be surrendered) multiplied by the Warrant
Exercise Price per share, and then divided by the “Market Price” (as defined in Section 10 below)
of a share of Common Stock.

     (c) Except as provided in Section 9 hereof, this Warrant may not be sold, transferred,
assigned, hypothecated or divided into two or more Warrants of smaller denominations, nor may any
Warrant Shares issued pursuant to exercise of this Warrant be transferred. In no event may this
Warrant be transferred and divided (without any exercise hereof) into any denomination(s) of less
than 100 Warrant Shares.

4. Exchange and Replacement. Subject to Sections 3 and 9 hereof, this Warrant is exchangeable upon
the surrender hereof by the Holder to the Corporation at its office for new

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Warrants of like tenor and date representing in the aggregate the right to purchase the number of
Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase
such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as
shall be designated by the Holder at the time of such surrender. Upon receipt by the Corporation of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of this Warrant, if mutilated, the Corporation will make and deliver a
new Warrant of like tenor, in lieu of this Warrant. This Warrant shall be promptly canceled by the
Corporation upon the surrender hereof in connection with any exchange or replacement. The
Corporation shall pay all expenses, taxes (other than stock transfer taxes), and other charges
payable in connection with the preparation, execution, and delivery of Warrants pursuant to this
Section 4.

5. Issuance of the Warrant Shares.

     (a) The Corporation agrees that the Warrant Shares shall be and are deemed to be
issued to the Holder as of the close of business on the date on which this Warrant shall have been
surrendered and the payment made for such Warrant Shares as aforesaid. Subject to the provisions of
paragraph (b) of this Section 5, certificates for the Warrant Shares so purchased shall be
delivered to the Holder within a reasonable time after the rights represented by this Warrant shall
have been so exercised, and, unless this Warrant has expired, a new Warrant representing the right
to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be delivered to the Holder.

     (b) Notwithstanding the foregoing, however, the Corporation shall not be required to deliver
any certificate for Warrant Shares upon exercise of this Warrant except in accordance with
exemptions from the applicable securities registration requirements or registrations under
applicable securities laws. Except as described in Section 11, nothing herein shall obligate the
Corporation to effect registrations under federal or state securities laws. If registrations are
not in effect and if exemptions are not available when the Holder seeks to exercise the Warrant,
the Warrant exercise period will be extended, if need be, to prevent the Warrant from expiring,
until such time as either registrations become effective or exemptions are available, and the
Warrant shall then remain exercisable for a period of at least 30 calendar days from the date the
Corporation delivers to the Holder written notice of the availability of such registrations or
exemptions. The Holder agrees to execute such documents and make such representations, warranties
and agreements as may be required solely to comply with the exemptions relied upon by the
Corporation, or the registrations made, for the issuance of the Warrant Shares.

6. Covenants of the Corporation. The Corporation covenants and agrees that all Warrant
Shares will, upon issuance, be duly authorized and issued, fully paid, non-assessable and free from
all taxes, liens and charges with respect to the issue thereof. The Corporation further covenants
and agrees that during the period within which the rights represented by this Warrant may be
exercised, the Corporation will at all times have authorized and reserved for the purpose of issue
or transfer upon exercise of the subscription rights evidenced by this Warrant a sufficient number
of shares of Common Stock to provide for
the exercise of the rights represented by this Warrant.

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7. Anti-dilution Adjustments. The provisions of this Warrant are subject to adjustment as provided
in this Section 7. No adjustment shall be made pursuant to this Section 7 if the same adjustment
has already been made pursuant to another provision of this Warrant.

     (a) Stock Splits, Dividends and Combinations. The otherwise applicable Warrant Exercise Price
shall be adjusted from time to time such that in case the Corporation shall hereafter:

          (i) pay any dividends on any class of stock of the Corporation payable in Common Stock or
securities convertible into Common Stock;

          (ii) subdivide its then outstanding shares of Common Stock into a greater number of shares; or

          (iii) combine outstanding shares of Common Stock, by reclassification or otherwise;

then, in any such event, the Warrant Exercise Price in effect immediately prior to such event shall
(until adjusted again pursuant hereto) be adjusted immediately after such event to a price
(calculated to the nearest full cent) determined by dividing (A) the number of shares of Common
Stock outstanding immediately prior to such event, multiplied by the then existing Warrant Exercise
Price, by (B) the total number of shares of Common Stock outstanding immediately after such event
(including in each case the maximum number of shares of Common Stock issuable in respect of any
securities convertible into Common Stock), and the resulting quotient shall be the adjusted Warrant
Exercise Price per share. An adjustment made pursuant to this Subsection shall become effective
immediately after the record date in the case of a dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision, combination or
reclassification. If, as a result of an adjustment made pursuant to this Subsection, the Holder of
any Warrant thereafter surrendered for exercise shall become entitled to receive shares of two or
more classes of capital stock or shares of Common Stock and other capital stock of the Corporation,
the Board of Directors (whose determination shall be conclusive) shall determine the allocation of
the adjusted Warrant Exercise Price between or among shares of such classes of capital stock or
shares of Common Stock and other capital stock. All calculations under this Subsection shall be
made to the nearest cent or to the nearest 1/100 of a share, as the case may be. In the event that
at any time as a result of an adjustment made pursuant to this Subsection, the holder of any
Warrant thereafter surrendered for exercise shall become entitled to receive any shares of the
Corporation other than shares of Common Stock, thereafter the Warrant Exercise Price of such other
shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions with respect to
Common Stock contained in this Section.

     (b) Mechanics of Adjustment for Stock Splits, Dividends and Combinations. Upon each adjustment
of the Warrant Exercise Price pursuant to Section 7(a) above, the Holder of each Warrant shall
thereafter (until another such adjustment) be entitled to purchase at the adjusted Warrant Exercise
Price the number of shares, calculated to the nearest full share, obtained by multiplying the
number of shares specified in such Warrant (as adjusted as a result of all

-6-

 

adjustments in the Warrant Exercise Price in effect prior to such adjustment) by the Warrant
Exercise Price in effect prior to such adjustment and dividing the product so obtained by the
adjusted Warrant Exercise Price.

     (c) Consolidations, Mergers and Reorganization Events. In case of any consolidation or merger
to which the Corporation is a party other than a merger or consolidation in which the Corporation
is the continuing corporation, or in case of any sale or conveyance to another corporation of the
property of the Corporation as an entirety or substantially as an entirety, or in the case of any
statutory exchange of securities with another corporation (including any exchange effected in
connection with a merger of a third corporation into the Corporation), there shall be no adjustment
under Subsection (a) of this Section 7; but the Holder of each Warrant then outstanding shall have
the right thereafter to convert such Warrant into the kind and amount of shares of stock and other
securities and property which he would have owned or have been entitled to receive immediately
after such consolidation, merger, statutory exchange, sale or conveyance had such Warrant been
converted immediately prior to the effective date of such consolidation, merger, statutory
exchange, sale or conveyance and, in any such case, if necessary, appropriate adjustment shall be
made in the application of the provisions set forth in this Section with respect to the rights and
interests thereafter of any Holders of the Warrant, to the end that the provisions set forth in
this Section shall thereafter correspondingly be made applicable, as nearly as may reasonably be,
in relation to any shares of stock and other securities and property thereafter deliverable on the
exercise of the Warrant. The provisions of this Subsection shall similarly apply to successive
consolidations, mergers, statutory exchanges, sales or conveyances.

     (d) Adjustments for Diluting Issues. In addition to the adjustments of the Warrant Exercise
Price provided above, the Warrant Exercise Price shall be subjected to further adjustment from time
to time as follows (the main operative provision hereof is in Section 7(d)(iii) below):

          (i) Special Definitions:

               (A) “Options” shall mean rights, options or warrants (other than as
excluded by Section 7(d)(i)(D) below) to subscribe for, purchase or otherwise acquire either Common
Stock or Convertible Securities (as defined herein).

               (B) “Original Issue Date” shall mean the date hereof.

               (C) “Convertible Securities” shall mean securities (other than as
excluded by Section 7(d)(i)(D) below) convertible, either directly or indirectly, into or
exchangeable for Common Stock.

               (D) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or,
deemed to be issued) by the Corporation after the Original Issue Date other than shares of Common
Stock issued (or deemed to be issued):

                    1. to employees, consultants or directors pursuant to stock option, stock grant, stock
purchase or similar plans or arrangements approved by the Corporation’s Board of Directors;

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                    2. as a dividend or other distribution in connection with which an adjustment to the Warrant
Exercise Price is made;

                    3. in a merger, consolidation, acquisition or similar business combination that is approved by
the Corporation’s Board of Directors;

                    4. pursuant to credit, lease or other commercial financing arrangements with parties not
affiliated with the Corporation that are approved by the Corporation’s Board of Directors;

                    5. in exchange for technology or other non-cash assets as approved by the Corporation’s Board
of Directors;

                    6. pursuant to any rights or agreements outstanding on the Original Issue Date (including
those rights relating to the Series Notes and the Series Warrants);

                    7. following the Merger, pursuant to any rights or agreements between Millenium and other
third parties outstanding on the Original Issue Date; or

                    8. if the Holder agrees in
writing that such shares shall not
constitute Additional Shares of Common Stock.

          (ii) Deemed Issue of Additional Shares of Common Stock. Except as otherwise provided in
Section 7(d), in the event the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the
determination of any holders of any class of securities entitled to receive any such Options or
Convertible Securities, then the maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for a subsequent adjustment of such
number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible
Securities and
Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed
to be Additional Shares of Common Stock issued as of the time of such issue or, in case such record
date shall have been fixed, as of the close of business on such record date, provided that in any
such case in which Additional Shares of Common Stock are deemed to be issued:

               (A) no further adjustment in the Warrant Exercise Price shall be made upon the subsequent
issue of such Convertible Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;

               (B) if such Options or Convertible Securities by their terms provide, with the passage of time
or otherwise, for any increase or decrease in the consideration payable to the Company, or increase
or decrease in the number of shares of Common Stock issuable upon the exercise, conversion or
exchange thereof, the Warrant Exercise Price computed upon the original issue thereof or upon the
occurrence of a record date with respect thereto, and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to reflect such
increase or decrease;

-8-

 

               (C) upon the expiration of any such Option or any rights of conversion or exchange under such
Convertible Securities which shall not have been exercised, the Warrant Exercise Price computed
upon the original issue thereof or upon occurrence of a record date with respect thereto, and any
subsequent adjustments based thereon, shall, upon such expiration:

                    1. in the case of Convertible Securities or Options for Common Stock, be recomputed as though
the only Additional Shares of Common Stock issued were shares of Common Stock, if any, actually
issued upon the exercise of such Options or the conversion or exchange of such Convertible
Securities, and the consideration received therefor was the consideration actually received by the
Company for the issue of all such Options, whether or not exercised, plus the consideration
actually received by the Company upon such exercise, or for the issue of all such Convertible
Securities, whether or not converted or exchanged, plus the additional consideration, if any,
actually received by the Company upon such conversion or exchange; and

                    2. in the case of Options for Convertible Securities, be recomputed as though only the
Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time
of issue of such Options and the consideration received by the Company for the Additional Shares of
Common Stock deemed to have been then issued was the consideration actually received by the Company
for the issue of all such Options, whether or not exercised, plus the consideration deemed to have
been received by the Company upon the issue of the Convertible Securities with respect to which
such Options were actually exercised.

               (D) no readjustment pursuant to Section 7(d) shall have the effect
of increasing the Warrant Exercise Price to an amount which exceeds the Warrant Exercise Price
existing immediately prior to the original adjustment with respect to the issuance of such Options
or Convertible Securities, as adjusted for any Additional Shares of Common Stock issued (or deemed
to be issued) between such original adjustment date and such readjustment date; and

               (E) in the case of any Option or Convertible Security with respect to which the maximum number
of shares of Common Stock issuable upon exercise or conversion or exchange thereof is not
determinable, no adjustment to the Warrant Exercise Price shall be made until such number becomes
determinable.

          (iii) Adjustments for Issuance of Additional Shares of Common Stock. If the Company, at any
time after the issuance of this Warrant, shall issue any Additional Shares of Common Stock
(otherwise than as provided in the Sections 7(a) and 7(c) above) at a price per share less than the
applicable Warrant Exercise Price then in effect or without consideration, then the applicable
Warrant Exercise Price upon each such issuance shall be adjusted to that price (rounded to the
nearest cent) determined by multiplying the applicable Warrant Exercise Price then in effect by a
fraction, (i) the numerator of which shall be equal to the sum of (A) the number of shares of
Common Stock outstanding immediately prior to the issuance of such Additional Shares of Common
Stock plus (B) the number of shares of Common Stock (rounded to the nearest whole share) which the
aggregate consideration for the total number of such Additional Shares of Common Stock so issued
would purchase at a price per share equal to the applicable Warrant Exercise Price then in effect,
and (ii) the denominator of which shall be equal

-9-

 

to the number of shares of Common Stock outstanding immediately after the issuance of such
Additional Shares of Common Stock.

     In addition to the other limitations provided herein, the provisions of this Section 7(d)(iii)
shall not apply under any of the circumstances for which an adjustment is provided in Sections
7(a), 7(b) or 7(c) above. No adjustment of the applicable Warrant Exercise Price shall be made
under this Section 7(d) upon the issuance of any Additional Shares of Common Stock which are issued
pursuant to any Options or Convertible Securities if upon the issuance of such Options or
Convertible Securities (x) any adjustment shall have been made pursuant to Section 7(d)(ii) above
or (y) no adjustment was required pursuant to this Section 7(d)(iii). No adjustment of the
applicable Warrant Exercise Price shall be made under this Section 7(d)(iii) in an amount less than
$.01 per share, but any such lesser adjustment shall be carried forward and shall be made at the
time and together with the next subsequent adjustment, if any, which together with any adjustments
so carried forward shall amount to $.01 per share or more; provided, however, that upon any
adjustment of the applicable Warrant Exercise Price as a result of any dividend or distribution
payable in Common Stock or Convertible Securities or the reclassification, subdivision or
combination of Common Stock into a greater or smaller number of shares, the foregoing figure of
$.01 per share (or such figure as last adjusted)
shall be adjusted (to the nearest one-half cent) in proportion to the adjustment in the
applicable Warrant Exercise Price.

          (iv) Determination of Consideration. For purposes of this Section 7(d), the consideration
received by the Corporation for any Additional Shares of Common Stock issued (or deemed to be
issued) shall be computed as follows:

               (A) Cash and Property. Such consideration shall:

                    1. insofar as it consists of cash, be computed at the aggregate
amount of cash received by the Corporation;

                    2. insofar as it consists of securities and the value of such securities is not determinable
by reference to a separate agreement, (A) if the securities are then traded on a national
securities exchange or the Nasdaq Stock Market (or a similar national quotation system), then the
value shall be computed based on the average of the closing prices of the securities on such
exchange or system over the thirty (30)-day period ending on the date of receipt by the
Corporation, (B) if the securities are actively traded over-the-counter, then the value shall be
computed based on the average of the closing bid prices over the thirty (30) day ending on the date
of receipt by the Corporation, and (C) if there is no active public market, then the value shall be
computed based on the fair market value thereof on the date of receipt by the Corporation, as
determined in good faith by the Board of Directors;

                    3. insofar as it consists of property other than cash and securities, be computed at the fair
market value thereof at the time of such issuance, as determined in good faith by the Board of
Directors; and

                    4. if Additional Shares of Common Stock are issued (or deemed to be issued) together with
other shares or securities or other assets of the Corporation for consideration which cover both,
by the proportion of such consideration so received,

-10-

 

computed as provided in the immediately preceding Sections 7(d)(iv)(A)(i), 7(d)(iv)(A)(ii) and
7(d)(iv)(A)(iii), as determined in good faith by the Board of Directors.

               (B) Options and Convertible Securities. The consideration received by the Corporation for
Additional Shares of Common Stock deemed to have been issued pursuant to Section 7(d) relating to
Option and Convertible Securities, shall be the sum of (x) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or Convertible
Securities, plus (y) the minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein for a subsequent
adjustment of such consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities.

     (e) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of
the Warrant Exercise Price or the number of Warrants covered hereby pursuant to this Section 7, the
Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to the Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of the Holder, furnish or cause to be
furnished to the Holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Warrant Exercise Price at the time in effect, and (iii) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be received upon the
exercise of this Warrant.

8. No Voting Rights. This Warrant shall not entitle the Holder to any voting rights or other rights
as a shareholder of the Corporation.

9. Notice of Transfer of Warrant or Resale of the Warrant Shares; Assumption upon
Merger.

     (a) Subject to the sale, assignment, hypothecation or other transfer restrictions set forth in
Section 3 hereof, the Holder, by acceptance hereof, agrees to give written notice to the
Corporation before transferring this Warrant or transferring any Warrant Shares of such Holder’s
intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving
such written notice, the Corporation shall present copies thereof to the Corporation’s counsel. If
in the opinion of such counsel the proposed transfer may be effected without registration or
qualification (under any federal or state securities laws), the Corporation, as promptly as
practicable, shall notify the Holder of such opinion, whereupon the Holder shall be entitled to
transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this
Warrant, all in accordance with the terms of the notice delivered by the Holder to the Corporation;
provided that an appropriate legend may be endorsed on this Warrant or the certificates for such
Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion
of counsel and satisfactory to the Corporation to prevent further transfers which would be in
violation of Section 5 of the 1933 Act and applicable state securities laws; and provided further
that the prospective transferee or purchaser shall execute such documents and make such
representations, warranties and agreements as may be required solely

-11-

 

to comply with the exemptions relied upon by the Corporation for the transfer or disposition of the
Warrant or Warrant Shares.

     (b) If, in the opinion of the Corporation’s counsel, the proposed transfer or
disposition of this Warrant or such Warrant Shares described in the written notice given
pursuant to this Section 9 may not be effected without registration or qualification of this
Warrant or such Warrant Shares, the Corporation shall promptly give written notice thereof to the
Holder, and the Holder will limit its activities in respect to such transfer or disposition as, in
the opinion of such counsel, are permitted by law.

     (c) Upon the consummation of the proposed Merger of the Corporation with Millenium, the rights
and obligations of the Corporation under this Warrant shall be assumed by Millenium and any
reference to the Corporation herein shall thereafter be deemed to be a reference to Millenium.

10. Fractional Shares. Fractional shares shall not be issued upon the exercise of this Warrant, but
in any case where the holder would, except for the provisions of this Section, be entitled under
the terms hereof to receive a fractional share, the Corporation shall, upon the exercise of this
Warrant for the largest number of whole shares then called for, pay a sum in cash equal to the sum
of (a) the excess, if any, of the Market Price of such fractional share over the proportional part
of the Warrant Exercise Price represented by such fractional share, plus (b) the proportional part
of the Warrant Exercise Price represented by such fractional share. For purposes of this Section
and Section 3(b) above, the term “Market Price” with respect to shares of Common Stock of any class
or series means the last reported sale price or, if none, the average of the last reported closing
bid and asked prices on any national or regional securities exchange or quoted in the National
Association of Securities Dealers, Inc.’s Automated Quotations System (“Nasdaq”), or if not listed
on a national or regional securities exchange or quoted in Nasdaq, the closing bid price as
reported by bigcharts.com (or if this service is discontinued, such other reporting service
acceptable to the Holder), or if no quotations in such Common Stock are available, the fair market
value of the shares as determined in good faith by the Board of Directors of the Corporation.

11. Registration Rights. Holder shall have registration rights for the Warrant Shares as described
in the Registration Rights Agreement of this same date.

     IN WITNESS WHEREOF, Sutura, Inc. has caused this Warrant to be signed by its duly authorized
officer and this Warrant to be dated September 17, 2004.

	 	 	 	 	 	 	 
	 	 	SUTURA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Anthony A. Nobles, President and Chief	 	 
	 

	 	 	 	Executive Officer	 	 

-12-

 

EXERCISE FORM

(To Be Executed by the Registered Holder in Order to Exercise the Warrant)

To: Sutura, Inc.

The undersigned hereby irrevocably elects to exercise the attached Warrant to purchase for cash,
                                         of the shares issuable upon the exercise of such Warrant, and requests that
certificates for such shares (together with a new Warrant to purchase the number of shares, if any,
with respect to which this Warrant is not exercised) shall be issued in the name of:

	 	 	 	 	 	 	 	 	 	 	 
	         

	 	NAME: 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	SOC. SEC. or TAX
I.D. NO. 	 	 	 	 
	 

	 	 	 	 	 	 	 

	 	 
	 	 	ADDRESS: 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 

Dated:                     , 20     .

	 	 	 
	 

	 	 
	 

	 	Signature *

 

			
	*	 	The signature on the Notice of Exercise of Warrant must correspond to the name as written
upon the face of the Warrant in every particular without alteration or enlargement or any change
whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please
indicate your position(s) and title(s) with such entity.

 

 

ASSIGNMENT FORM

(To be Executed by the Registered Holder in Order to Transfer the Warrant)

To: Sutra, Inc.

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto
                                                             the right to purchase the securities of Sutra, Inc. to which the
within Warrant relates and appoints                                         , attorney, to transfer said right on
the books of Sutra, Inc. with full power of substitution in the premises.

Dated:                     , 20      

	 	 	 
	 

	 	 
	 

	 	(Signature)
	 
	 	 
	 

	 	Address:

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