Document:

Amendment to Warrants

     

    EXHIBIT
      10.1

     

    FEMONE,
      INC.

    1905
      Aston Avenue, Suite 101

    Carlsbad,
      CA 92008

     

    March
      31,
      2006

    

    AJW
      Partners, LLC

    New
      Millennium Capital Partners II, LLC

    AJW
      Offshore, Ltd. 

    AJW
      Qualified Partners, LLC

    1044
      Northern Boulevard

    Suite
      302

    Roslyn,
      New York 11576

    

    
      	
            	Re:	
              FemOne,
                Inc. (the “Company”) -

            

    

    Amendment
      of Warrants

     

    Ladies
      and Gentlemen:

     

    This
      letter sets forth the agreement of the parties hereto to amend the exercise
      price and maturity of certain warrants, which are convertible into shares of
      the
      Company’s common stock, par value $.001 per share (the “Common
      Stock”),
      originally issued by the Company to the investors listed in the signature pages
      hereto (collectively, the “Investors”),
      on
      July 23, 2004, September 15, 2004, October 12, 2004 and June 30, 2005 ( the
      “Warrants”).

     

    By
      execution hereof, for good and valuable consideration the receipt and
      sufficiency of which is hereby acknowledged, the parties hereto agree
      that:

     

    
      	 	
              1.

            	
              The
                exercise price shall be as follows: 17,666,667 warrants shall be
                exercisable at $.06 per share; 17,666,667 warrants shall be exercisable
                at
                $.15 per share and 17,666,667 warrants shall be exercisable at $.20
                per
                share.

            

    

     

    
      	 	
              2.

            	
              The
                term for all of the Warrants shall be extended for an additional
                5 year
                term such that the Warrants shall expire on March 31,
                2011.

            

    

     

    
      	 	
              3.

            	
              The
                Warrants are hereby amended in accordance with the foregoing
                provision. All
                other provisions of the Warrants, as amended from time to time, shall
                remain in full force and effect.

            

    

     

    The
      parties shall do and perform, or cause to be done and performed, all such
      further acts and things, and shall execute and deliver all such other
      agreements, certificates, instruments and documents, as the other parties hereto
      may reasonably request in order to carry out the intent an accomplish the
      purposes of this letter agreement, including without limitation the issuance
      of
      amended Notes.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Please
      signify your agreement with the foregoing by signing a copy of this letter
      where
      indicated and returning it to the undersigned.

     

     

    Sincerely,

    

    FEMONE,
      INC.

    

    

    /s/
      Ray W. Grimm, Jr.

    Ray
      W.
      Grimm, Jr.

    Chief
      Executive Officer

    ACCEPTED
      AND AGREED:

     

    AJW
      PARTNERS, LLC.

    By:
      SMS
      GROUP, LLC

     

    /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky, Manager

     

    

    NEW
      MILLENNIUM CAPITAL PARTNERS II, LLC

    By:
      FIRST
      STREET MANAGER II, LLC,

    

    /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky, Manager

    

    

    AJW
      OFFSHORE, LTD.

    By:
      FIRST
      STREET MANAGER II, LLC

    

    /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky, Manager

    

    AJW
      QUALIFIED PARTNERS, LLC

    By:
      AJW
      MANAGER, LLC

    

    /s/
      Corey S. Ribotsky

    Corey
      S.
      Ribotsky, Manager<PAGE>
EXHIBIT 10.1

                              PREPAYMENT AGREEMENT

THIS PREPAYMENT AGREEMENT ("Agreement") is made this 31st day of March, 2006, by
and between SUPERIOR GALLERIES, INC,. a Delaware corporation ("Borrower") and
the JOHN WESLEY ENGLISH LIVING TRUST (the "Trust"), with respect to the
following facts:

                                 R E C I T A L S

         A. The Trust is the successor to John Wesley English, who made certain
loans to the Borrower's predecessor-in-interest. As a result of those loans and
the succession by the Trust to the liabilities, obligations and rights of John
Wesley English, the Borrower is now indebted to the Trust in the principal
amount of $1,900,000, plus interest of $9,682.19 as of March 31, 2006 (the
"Indebtedness"). The Borrower is presently obligated to make monthly payments
with respect to such Indebtedness, with the entire unpaid balance being due and
payable September 1, 2006 (the "Maturity Date").

         B. The parties desire that the entire balance of the Indebtedness be
paid in the manner set forth herein, and that in connection therewith the
Borrower shall be released from any further obligation with respect to the
Indebtedness.

                                A G R E E M E N T

         NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements to the parties contained herein, the parties do hereby agree as
follows:

1. PAYMENT.

On or before March 31, 2006, Borrower shall:

         (a) Deliver to the Trust rare and collectible coins ("Coins") having a
value, determined as set forth below, of One Million Dollars ($1,000,000);

         (b) Deliver to the Trust a certified or cashier's check in the amount
of $850,000; and

         (c) Deliver to the Trust a check in the amount of $9,682.19,
constituting accrued interest through March 31, 2006.

2. VALUATION OF COINS.

         The Coins shall be valued at their wholesale value as determined by a
valuation performed by Mr. Kevin Lipton. Each of the parties agrees to accept
the valuation placed on the Coins in this manner.

3. WAIVER AND RELEASE.

         The Trust agrees that effective upon its receipt of the consideration
described Section 1 above, the Indebtedness shall be paid in full, and upon such
receipt the Trust waives, releases and forever discharges Borrower from any
remaining obligations under or liability with respect to the Indebtedness, which
shall, accordingly, then be conclusively considered to have been paid in full.
The parties agree that the Trust's waiver of Fifty Thousand Dollars ($50,000) of
the principal amount of Indebtedness shall be in consideration of the Company's
agreement to prepay the Indebtedness at the time and in the manner described
herein. Accordingly, the Trust agrees that all security interests it holds in
collateral provided by the Borrower with respect to the Indebtedness are
terminated, and the Trust authorizes the Borrower to file appropriate
termination statements in all jurisdictions in which such security interests are
of record. The Trust further agrees that all guarantees with respect to the
Indebtedness are terminated as a result of the payments made pursuant to Section
1 above.

<PAGE>

4. MISCELLANEOUS.

         (a) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

         (b) COUNTERPARTS. This Agreement may be executed in two counterparts,
which taken together shall be deemed a single instrument. Executed copies of
this Agreement may be delivered by facsimile transmission, and delivery by such
means shall have the same effect as delivery of the executed original agreement.

         (c) ENTIRE AGREEMENT. This Agreement includes the entire agreement of
the parties concerning the subject matter hereof, and supersedes all prior
discussions or agreements concerning such subject matter.

         (d) AUTHORIZATION. Each of the parties hereby represents that such
party has been fully authorized by all necessary corporate or trust action, as
appropriate, in connection with the execution, delivery and performance of this
Agreement, and that this Agreement therefore constitutes such party's valid,
binding and enforceable agreement.

         IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the dates indicated opposite their names below.

                                             BORROWER:
Dated:  March 31, 2006                       SUPERIOR GALLERIES, INC,
                                             a Delaware corporation

                                             By: /S/ PAUL SONG
                                                 -------------------------------
                                                 Paul Song, Vice President

                                             TRUST:
Dated:  March 31, 2006                       JOHN WESLEY ENGLISH LIVING TRUST

                                             By: /S/ MICHAEL VERNA
                                                 -------------------------------
                                                 Michael Verna, Trusteeexv4w3

 

Exhibit 4.3

Schedule Prepared in Accordance with Instruction 2

to Item 601 of Regulation S-K

     The warrants to purchase shares of Series A Convertible Preferred Stock are substantially
identical in all material respects except as to the warrantholder and the number of shares.

	 	 	 	 	 	 	 	 	 
	Warrantholder	 	Number of shares	 	Date
	TBCC Funding Trust II
	 	 	60,000	 	 	 	7/31/2002	 
	GATX Ventures, Inc.
	 	 	80,000	 	 	 	7/31/2002	 

 

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE
SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION
STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY
TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM
THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF
SECTION 7 OF THIS WARRANT.

REPLIDYNE, INC.

WARRANT
TO
PURCHASE             SHARES

OF SERIES A CONVERTIBLE PREFERRED STOCK

      THIS
CERTIFIES THAT, for value
received,                    
                   and its assignees
are entitled to subscribe for and purchase              shares of
Series  Preferred (as defined below)(as
adjusted pursuant to Section 4 hereof, the “Shares”) of REPLIDYNE, INC., a Delaware corporation
(the “Company”), at the price of One Dollar ($1.00) per share (such price and such other price as
shall result, from time to time, from the adjustments specified in Section 4 hereof is herein
referred to as the “Warrant Price”), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, (a) the term “Series Preferred” shall mean the Company’s
presently authorized Series A Convertible Preferred Stock, and any stock into or for which such
Series A Convertible Preferred Stock may hereafter be converted or exchanged, and after the
automatic conversion of the Series A Convertible Preferred Stock to Common Stock pursuant to the
terms of the Company’s Charter (as defined in Section 4(e) below) shall mean the Company’s Common
Stock, (b) the term “Date of Grant” shall mean July 31, 2002, and (c) the term “Other Warrants”
shall mean any other warrants issued by the Company in connection with the transaction with respect
to which this Warrant was issued, and any warrant issued upon transfer or partial exercise of or in
lieu of this Warrant. The term “Warrant” as used herein shall be deemed to include Other Warrants
unless the context clearly requires otherwise.

     1. Term. The purchase right represented by this Warrant is exercisable, in whole or in
part, at any time and from time to time from the Date of Grant through the later of (i) ten
(10) years
after the Date of Grant or (ii) five (5) years after the closing of the Company’s initial
public offering
of its Common Stock (“IPO”) effected pursuant to a
Registration Statement on Form S-1 (or its
successor) filed under the Securities Act of 1933, as amended (the “Act”).

     2. Method of Exercise; Payment; Issuance of New Warrant. Subject to Section 1 hereof,
the purchase right represented by this Warrant may be exercised by the holder hereof, in whole
or in part and from time to time, at the election of the holder hereof, by (a) the surrender of this
Warrant (with the notice of exercise substantially in the form
attached hereto as Exhibit A-1 duly
completed and executed) at the principal office of the Company and by the payment to the Company, by
certified or bank check, or by wire transfer to an account designated by the Company (a “Wire
Transfer”) of an amount equal to the then applicable Warrant Price multiplied by the number of

 

 

Shares then being purchased; (b) if in connection with a registered public offering of the
Company’s securities, the surrender of this Warrant (with the notice of exercise substantially in
the form attached hereto as Exhibit A-2 duly completed and executed) at the principal office of the
Company together with notice of arrangements reasonably satisfactory to the Company for payment to
the Company either by certified or bank check or by Wire Transfer from the proceeds of the sale of
shares to be sold by the holder in such public offering of an amount equal to the then applicable
Warrant Price per share multiplied by the number of Shares then being purchased; or (c) exercise of
the “net issuance” right provided for in Section 10.2 hereof. The person or persons in whose
name(s) any certificate(s) representing shares of Series Preferred shall be issuable upon exercise
of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for
all purposes as the record holder(s) of, the shares represented thereby (and such shares shall be
deemed to have been issued) immediately prior to the close of business on the date or dates upon
which this Warrant is exercised as provided above. In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of stock so purchased shall be delivered
to the holder hereof as soon as possible and in any event within thirty (30) days after such
exercise and, unless this Warrant has been fully exercised or expired, a new Warrant representing
the portion of the Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof as soon as possible and in any event within
such thirty-day period; provided, however, at such time as the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, if requested by the holder of this
Warrant, the Company shall cause its transfer agent to deliver the certificate representing Shares
issued upon exercise of this Warrant to a broker or other person (as directed by the holder
exercising this Warrant) within the time period required to settle any trade made by the holder
after exercise of this Warrant.

     3. Stock
Fully Paid; Reservation of Shares. All Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance pursuant to the terms
and conditions herein, be fully paid and nonassessable, and free from all preemptive rights and
taxes, liens and charges with respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this Warrant,
a sufficient number of shares of its Series Preferred to provide for the exercise of the rights
represented by this Warrant and a sufficient number of shares of its Common Stock to provide for
the conversion of the Series Preferred into Common Stock.

     4. Adjustment
of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price shall be
subject to adjustment from time to time upon the occurrence of certain events, as follows:

          (a) Reclassification
or Merger. In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or in case of any merger of the Company with or into another
corporation (other than (A) a Sale of the Company (as defined in Section 10.1 below) or (B) a
merger with another corporation in which the Company is the acquiring and the surviving corporation
and which does not result in any reclassification or change of outstanding securities issuable upon
exercise of this

-2-

 

Warrant), the Company, or such successor or purchasing corporation, as the case may be, shall duly
execute and deliver to the holder of this Warrant a new Warrant (in form and substance reasonably
satisfactory to the holder of this Warrant), or the Company shall make appropriate provision
without the issuance of a new Warrant, so that the holder of this Warrant shall have the right to
receive upon exercise of this Warrant, at a total purchase price not to exceed that payable upon
the exercise of the unexercised portion of this Warrant, and in lieu of the shares of Series
Preferred theretofore issuable upon exercise of this Warrant, the kind and amount of shares of
stock, other securities, money and property receivable upon such reclassification, change, merger
or sale by a holder of the number of shares of Series Preferred then purchasable under this
Warrant. Any new Warrant shall provide for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4. The provisions of this Section 4(a)
shall similarly apply to successive reclassifications, changes, mergers and sales. The Company
shall provide the holder of this Warrant not less than twenty (20) days’ prior written notice prior
to the closing of any Sale of the Company, which notice shall include the proposed terms and
conditions of such Sale of the Company. If, following receipt of timely notice from the Company,
the holder of this Warrant shall notify the Company not less than five (5) days prior to the
closing of such Sale of the Company of such holder’s intent to exercise the purchase right
represented by this Warrant as provided in Section 2 above (including, without limitation, by way
of net issuance as provided in Section 10.2 below), such exercise will be deemed effective upon
completion of such Sale of the Company or, alternatively, rescinded in the event such Sale of the
Company is not completed. If, following receipt of timely notice from the Company, the holder of
this Warrant has not notified the Company of its election not less than five (5) days prior to such
Sale of the Company, then: (X) if the fair market value of one share of the Series A Convertible
Preferred Stock is greater than the Warrant Price then in effect, this Warrant shall be deemed
automatically exercised pursuant to Section 10.3 below upon completion of such Sale of the Company;
and (Y) if the fair market value of one share of the Series A Convertible Preferred Stock is less
than the Warrant Price then in effect, this Warrant will expire upon completion of such Sale of the
Company.

          (b)
      Subdivision or Combination of Shares. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its outstanding shares of
Series Preferred, the Warrant Price shall be proportionately decreased and the number of
Shares
issuable hereunder shall be proportionately increased in the case of a subdivision and the
Warrant
Price shall be proportionately increased and the number of Shares issuable hereunder shall be
proportionately decreased in the case of a combination.

          (c)      
Stock Dividends and Other Distributions. If the Company at any time while
this Warrant is outstanding and unexpired shall (i) pay a dividend with respect to Series Preferred
payable in Series Preferred, then the Warrant Price shall be adjusted, from and after the date of
determination of shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such date of
determination by a fraction (A) the numerator of which shall be the total number of shares of Series
Preferred outstanding immediately prior to such dividend or distribution, and (B) the denominator of
which shall be the total number of shares of Series Preferred outstanding immediately after such
dividend or distribution; or (ii) make any other distribution with respect to Series Preferred (except
any distribution specifically provided for in Sections 4(a) and 4(b)), then, in each such case,

-3-

 

provision shall be made by the Company such that the holder of this Warrant shall receive
upon exercise of this Warrant a proportionate share of any such dividend or distribution as though
it were the holder of the Series Preferred (or Common Stock issuable upon conversion thereof) as of
the record date fixed for the determination of the shareholders of the Company entitled to receive
such dividend or distribution.

          (d)      
Adjustment of Number of Shares. Upon each adjustment in the Warrant
Price, the number of Shares of Series Preferred purchasable hereunder shall be adjusted, to the
nearest whole share, to the product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Warrant Price by a fraction, the numerator of which shall
be the Warrant Price immediately prior to such adjustment and the denominator of which shall be the
Warrant Price immediately thereafter.

          (e)      
Antidilution Rights. The other antidilution rights applicable to the Shares of
Series Preferred purchasable hereunder are set forth in the Company’s Certificate of
Incorporation, as
amended through the Date of Grant, a true and complete copy of which is attached hereto as
Exhibit B (the “Charter”). Such antidilution rights shall not be restated, amended, modified
or
waived in any manner that is more adverse to the holder hereof than to any other holders of
Series
Preferred without such holder’s prior written consent. The Company shall promptly provide the
holder hereof with any restatement, amendment, modification or waiver of the Charter promptly
after
the same has been made.

     5. Notice of Adjustments. Whenever the Warrant Price or the number of Shares
purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the Company shall make a
certificate signed by its chief financial officer setting forth, in reasonable detail, the
event requiring
the adjustment, the amount of the adjustment, the method by which such adjustment was
calculated,
and the Warrant Price and the number of Shares purchasable hereunder after giving effect to
such
adjustment, and shall cause copies of such certificate to be mailed (without regard to Section
13
hereof, by first class mail, postage prepaid) to the holder of this Warrant. In addition,
whenever the
conversion price or conversion ratio of the Series Preferred shall be adjusted, the Company
shall
make a certificate signed by its chief financial officer setting forth, in reasonable detail,
the event
requiring the adjustment, the amount of the adjustment, the method by which such adjustment
was
calculated, and the conversion price or ratio of the Series Preferred after giving effect to
such
adjustment, and shall cause copies of such certificate to be mailed (without regard to Section
13
hereof, by first class mail, postage prepaid) to the holder of this Warrant.

     6. Fractional Shares. No fractional shares of Series Preferred will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares the Company
shall make
a cash payment therefor based on the fair market value of the Series Preferred on the date of
exercise
as reasonably determined in good faith by the Company’s Board of Directors.

     7. Compliance with Act; Disposition of Warrant or Shares of Series Preferred.

          (a) Compliance with Act. The holder of this Warrant, by acceptance hereof,
agrees that this Warrant, and the shares of Series Preferred to be issued upon exercise hereof and
any

-4-

 

Common Stock issued upon conversion thereof are being acquired for investment and that such holder
will not offer, sell or otherwise dispose of this Warrant, or any shares of Series Preferred to be
issued upon exercise hereof or any Common Stock issued upon conversion thereof except under
circumstances which will not result in a violation of the Act or any applicable state securities
laws. Upon exercise of this Warrant, unless the Shares being acquired are registered under the Act
and any applicable state securities laws or an exemption from such registration is available, the
holder hereof shall confirm in writing that the shares of Series Preferred so purchased (and any
shares of Common Stock issued upon conversion thereof) are being acquired for investment and not
with a view toward distribution or resale in violation of the Act and shall confirm such other
matters related thereto as may be reasonably requested by the Company. This Warrant and all shares
of Series Preferred issued upon exercise of this Warrant and all shares of Common Stock issued upon
conversion thereof (unless registered under the Act and any applicable state securities laws) shall
be stamped or imprinted with a legend in substantially the following form:

“THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE
REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION
LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR
INDIRECTLY.”

     Said legend shall be removed by the Company, upon the request of a holder, at such time as
the restrictions on the transfer of the applicable security shall have terminated. In addition, in
connection with the issuance of this Warrant, the holder specifically represents to the Company by
acceptance of this Warrant as follows:

               (1) The holder is aware of the Company’s business affairs and financial
condition, and has acquired information about the Company sufficient to reach an informed and
knowledgeable decision to acquire this Warrant. The holder is acquiring this Warrant for its
own
account for investment purposes only and not with a view to, or for the resale in connection
with, any
“distribution” thereof in violation of the Act.

               (2) The holder understands that this Warrant has not been registered under
the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among
other things, the bona fide nature of the holder’s investment intent as expressed herein.

               (3) The holder further understands that this Warrant must be held
indefinitely unless subsequently registered under the Act and qualified under any applicable state
securities laws, or unless exemptions from registration and qualification are otherwise available.
The holder is aware of the provisions of Rule 144, promulgated under the Act.

               (4) The holder is an “accredited investor” as such term is defined in Rule 501 of
Regulation D promulgated under the Act.

-5-

 

          (b) Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant, any shares of Series Preferred acquired pursuant to the exercise
hereof or any shares of Common Stock issued upon conversion thereof prior to registration of this
Warrant or such shares, the holder hereof agrees to give written notice to the Company prior
thereto, describing briefly the manner thereof, together with a written opinion of such holder’s
counsel, or other evidence, if reasonably satisfactory to the Company, to the effect that such
offer, sale or other disposition may be effected without registration or qualification (under the
Act as then in effect or any federal or state securities law then in effect) of this Warrant or
such shares and indicating whether or not under the Act certificates for this Warrant or such
shares of Series Preferred to be sold or otherwise disposed of require any restrictive legend as to
applicable restrictions on transferability in order to ensure compliance with such law. Upon
receiving such written notice and reasonably satisfactory opinion or other evidence, the Company,
as promptly as practicable but no later than fifteen (15) days after receipt of the written notice,
shall notify such holder that such holder may sell or otherwise dispose of this Warrant or such
shares of Series Preferred or Common Stock, all in accordance with the terms of the notice
delivered to the Company. If a determination has been made pursuant to this Section 7(b) that the
opinion of counsel for the holder or other evidence is not reasonably satisfactory to the Company,
the Company shall so notify the holder promptly with details thereof after such determination has
been made. Notwithstanding the foregoing, this Warrant or such shares of Series Preferred or Common
Stock may, as to such federal laws, be offered, sold or otherwise disposed of in accordance with
Rule 144 or 144A under the Act, provided that the Company shall have been furnished with such
information as the Company may reasonably request to provide a reasonable assurance that the
provisions of Rule 144 or 144A have been satisfied. Each certificate representing this Warrant or
the shares of Series Preferred or Common Stock thus transferred (except a transfer pursuant to Rule
144 or 144A) shall bear a legend as to the applicable restrictions on transferability in order to
ensure compliance with such laws, unless in the aforesaid opinion of counsel for the holder, such
legend is not required in order to ensure compliance with such laws. The Company may issue stop
transfer instructions to its transfer agent in connection with such restrictions.

          (c) Applicability of Restrictions. Neither any restrictions of any legend
described in this Warrant nor the requirements of Section 7(b) above shall apply to any transfer
of, or grant of a security interest in, this Warrant (or the Series Preferred or Common Stock
obtainable upon exercise thereof) or any part hereof (i) to a partner of the holder if the holder
is a partnership or to a member of the holder if the holder is a limited liability company, (ii) to
a partnership of which the holder is a partner or to a limited liability company of which the
holder is a member, or (iii) to any affiliate of the holder if the holder is a corporation;
provided, however, in any such transfer, if applicable, the transferee shall on the
Company’s request agree in writing to be bound by the terms of this Warrant as if an original
holder hereof.

     8. Rights
as Shareholders; Information. No holder of this Warrant, as
such, shall be entitled to vote or receive dividends or be deemed the holder of Series
Preferred or any other securities of the Company which may at any time be issuable upon the
exercise hereof for any

-6-

 

purpose, nor shall anything contained herein be construed to confer upon the holder of this
Warrant, as such, any of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any meeting thereof, or to
receive notice of meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the Shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein. Notwithstanding the foregoing, the Company will transmit to
the holder of this “ Warrant such information, documents and reports as are generally distributed
to the holders of any class or series of the securities of the Company concurrently with the
distribution thereof to the shareholders.

     9. Registration
Rights. The Company shall take such actions as may be reasonably
necessary to amend the Company’s Stockholders’ Agreement dated as of February 20, 2002 (as the
same may be amended or restated from time to time, the “Stockholders’ Agreement”) by and among
the Company and the Stockholders identified on Schedule 1 thereto, to include the Shares as
Restricted Securities, as such term is defined therein, solely for purposes of Sections 3.4
through
3.10 of the Stockholders’ Agreement, and the holder hereof shall execute and deliver such
counterpart signature pages to the Stockholders’ Agreement and shall take such other action as
may
be reasonably necessary to become a party to the Stockholders’ Agreement or to have the Shares
included as Restricted Securities thereunder.

     10. Additional
Rights.

     10.1
Acquisition Transactions. The Company shall provide the holder of this Warrant
with
at least twenty (20) days’ written notice prior to closing thereof of the terms and conditions
of any of
the following transactions (to the extent the Company has notice thereof): (i) the sale,
lease,
exchange, conveyance or other disposition of all or substantially all of the Company’s
property or
business, or (ii) its merger into or consolidation with any other corporation (other than a
wholly-owned subsidiary of the Company), or any transaction (including a merger or other
reorganization) or
series of related transactions, in which more than 50% of the voting power of the Company is
disposed of. Any transaction described in (i) or (ii) above in which the sole consideration
paid in
respect of the Company’s property, business and stock is cash or publicly traded securities
shall be
deemed a “Sale of the Company” for purposes of this Warrant and treated in accordance with the
applicable provisions of Section 4(a) above.

-7-

 

     10.2 Right to Convert Warrant into Stock: Net Issuance.

          (a) Right to Convert. In addition to and without limiting the rights of the
holder under the terms of this Warrant, if the fair market value of one share of the Series
Preferred is greater than the Warrant Price then in effect, the holder shall have the right to
convert this Warrant or any portion thereof (the “Conversion Right”) into shares of Series
Preferred as provided in this Section 10.2 at any time or from time to time during the term of this
Warrant. Upon exercise of the Conversion Right with respect to a particular number of shares
subject to this Warrant (the “Converted Warrant Shares”), the Company shall deliver to the holder
(without payment by the holder of any exercise price or any cash or other consideration) that
number of shares of fully paid and nonassessable Series Preferred as is determined according to the
following formula:

	 	 	 	 	 	 	 
	X
= B - A
	 	 	 	 	 	 
	  Y
	 	 	 	 	 	 
	Where:     

	 	X
	 	=
	 	the number of shares of Series Preferred that shall be issued to holder
	 
	 	 	 	 	 	 
	 

	 	Y
	 	=
	 	the fair market value of one share of Series Preferred
	 
	 	 	 	 	 	 
	 

	 	A
	 	=
	 	the aggregate Warrant Price of the specified number of Converted
Warrant Shares immediately prior to the exercise of the Conversion
Right (i.e., the number of Converted Warrant Shares multiplied by the Warrant price)
	 
	 	 	 	 	 	 
	 

	 	B
	 	=
	 	the aggregate fair market value of the specified number of converted Warrant Shares
(i.e., the number of Converted Warrant Shares multiplied by the fair market value of one
Converted Warrant Share)

     No fractional shares shall be issuable upon exercise of the Conversion Right, and, if the number of
shares to be issued determined in accordance with the foregoing formula is other than a
whole number, the Company shall pay to the holder an amount in cash equal to the fair market value
of the resulting fractional share on the Conversion Date (as hereinafter defined). For purposes of Section 10 of this
Warrant, shares issued pursuant to the Conversion Right shall be treated as if they ware issued upon
the exercise of this Warrant.

          (b) Method of Exercise. The Conversion Right may be exercised by the holder by the surrender of this
Warrant at the principal office of the Company together with a written statement
(which may be in the form of Exhibit A-1 or Exhibit A-2 hereto) specifying that the holder thereby intends
to exercise the Conversion Right and indicating the number of shares
subject to this Warrant
which are being surrendered (referred to in Section 10.2(a) hereof as the Converted Warrant Shares)
in exercise of the Conversion Right. Such conversion shall be effective upon receipt by the
Company of this Warrant together with the aforesaid written statement, or on such later date as is
specified therein (the “Conversion Date”), and at the election of the holder hereof, may be made
contingent upon the closing of the sale of the Company’s Common Stock to the public in a public
offering pursuant to a Registration Statement under the Act (a “Public Offering”). Certificates for
the shares issuable upon exercise of the Conversion Right and, if applicable, a new warrant
evidencing the balance of the shares remaining subject to this Warrant, shall be issued as of the
Conversion Date and shall be delivered to the holder within thirty (30) days following the
Conversion Date.

-8-

 

          (c) Determination of Fair Market Value. For purposes of this Section 10.2, “fair market value” of a share of Series Preferred (or Common Stock if the Series Preferred has been
automatically converted into Common Stock) as of a particular date (the “Determination Date”) shall mean:

               (i) If the Conversion Right is exercised in connection with and contingent
upon a Public Offering, and if the Company’s Registration Statement relating to such Public
Offering (“Registration Statement”) has been declared effective by the Securities and Exchange
Commission, then the initial “Price to Public” specified in the final prospectus with respect to
such offering.

               (ii) If the Conversion Right is not exercised in connection with and contingent upon
a Public Offering, then as follows:

          (A) If traded on a securities exchange, the fair market value of the Common Stock
shall be deemed to be the average of the closing prices of the Common Stock on such exchange
over
the five trading days immediately prior to the Determination Date, and the fair market value
of the
Series Preferred shall be deemed to be such fair market value of the Common Stock multiplied
by
the number of shares of Common Stock into which each share of Series Preferred is then
convertible;

          (B) If traded on the Nasdaq Stock Market or other over-the-counter system, the
fair market value of the Common Stock shall be deemed to be the average of the closing bid
prices of
the Common Stock over the five trading days immediately prior to the Determination Date, and
the
fair market value of the Series Preferred shall be deemed to be such fair market value of the
Common Stock multiplied by the number of shares of Common Stock into which each share of
Series Preferred is then convertible; and

          (C) If there is no public market for the Common Stock, then fair market value
shall be determined in good faith by the Company’s board of directors.

In making a determination under clauses (A) or (B) above, if on the Determination Date, five
trading days had not passed since the IPO, then the fair market value of the Common Stock shall be
the average closing prices or closing bid prices, as applicable, for the shorter period beginning
on and including the date of the IPO and ending on the trading day prior to the Determination Date
(or if such period includes only one trading day the closing price or closing bid price, as
applicable, for such trading day). If closing prices or closing bid prices are no longer reported
by a securities exchange or other trading system, the closing price or closing bid price shall be
that which is reported by such securities exchange or other trading system at 4:00 p.m. New York
City time on the applicable trading day.

     10.3 Exercise Prior to Expiration. To the extent this Warrant is not previously
exercised as to all of the Shares subject hereto, and if the fair market value of one share of the
Series Preferred is greater than the Warrant Price then in effect, this Warrant shall be deemed
automatically exercised pursuant to Section 10.2 above (even if not surrendered) immediately before
its expiration. For purposes of such automatic exercise, the fair market value of one share of the
Series Preferred upon such expiration shall be determined pursuant to Section 10.2(c). To the
extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this
Section 10.3, the Company agrees to promptly notify the holder hereof of the number of Shares, if
any, the holder hereof is to receive by reason of such automatic exercise.

-9-

 

     11. Representations and Warranties. The Company represents and warrants to the
holder of this Warrant as follows:

          (a) This Warrant has been duly authorized and executed by the Company and is a
valid and binding obligation of the Company enforceable in accordance with its terms, subject
to
laws of general application relating to bankruptcy, insolvency and the relief of debtors and
the rules
of law or principles at equity governing specific performance, injunctive relief and other
equitable
remedies.

          (b) The Shares have been duly authorized and reserved for issuance by the
Company and, when issued in accordance with the terms hereof, will be validly issued, fully
paid and
nonassessable and free from preemptive rights.

          (c) The rights, preferences, privileges and restrictions granted to or imposed upon
the Series Preferred and the holders thereof are as set forth in the Charter, and on the Date
of Grant,
each share of the Series Preferred represented by this Warrant is convertible into one share
of
Common Stock.

          (d) The shares of Common Stock issuable upon conversion of the Shares have
been duly authorized and reserved for issuance by the Company and, when issued in accordance
with
the terms of the Charter will be validly issued, fully paid and nonassessable.

          (e) The execution and delivery of this Warrant are not, and the issuance of the
Shares upon exercise of this Warrant in accordance with the terms hereof will not be,
inconsistent
with the Company’s Charter or by-laws, do not and will not contravene in any material respect
any
law, governmental rule or regulation, judgment or order applicable to the Company, and do not
and
will not conflict with or contravene in any material respect any provision of, or constitute a
default
under, any indenture, mortgage, contract or other instrument of which the Company is a party
or by
which it is bound or require the consent or approval of, the giving of notice to, the
registration or
filing with or the taking of any action in respect of or by, any Federal, state or local
government
authority or agency or other person, except for the filing of notices pursuant to federal and
state
securities laws, which filings will be effected by the time required thereby.

          (f) As of the Date of Grant, there are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the Company in any
court or before any governmental commission, board or authority which, if adversely
determined,
could reasonably be expected to have a material adverse effect on the ability of the Company
to
perform its obligations under this Warrant.

          (g) The number of shares of Common Stock of the Company outstanding on the
date hereof, on a fully diluted basis (assuming the conversion of all outstanding convertible
securities
and the exercise of all outstanding options and warrants), does not exceed 18,500,000 shares.

     12. Modification and Waiver. 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.

-10-

 

     13. Notices. All notices required or permitted to be given hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified;
(b) when sent by confirmed telex or facsimile if sent during normal business hours of the
recipient or, if
not, then on the next business day; (c) five (5) days after having been sent by certified or
registered
mail, postage prepaid and return receipt requested; or (d) one (1) day after deposit with a
nationally
recognized overnight courier, specifying next day delivery, with written verification of
receipt. All
communications shall be sent to the Company or to the holder at the address listed for such
party on
the signature page of this Warrant or at such other address as the Company or holder may
designate
by ten (10) days advance written notice to the other party.

     14. Binding Effect on Successors. This Warrant shall be binding upon any corporation
succeeding the Company by merger, consolidation or acquisition of all or substantially all of
the
Company’s assets, and all of the obligations of the Company relating to the Series Preferred
issuable
upon the exercise or conversion of this Warrant shall survive the exercise, conversion and
termination of this Warrant and all of the covenants and agreements of the Company shall inure
to
the benefit of the successors and assigns of the holder hereof.

     15. Lost Warrants or Stock Certificates. The Company covenants to the holder hereof
that, upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction
or mutilation of this Warrant or any stock certificate and, in the case of any such loss,
theft or
destruction, upon receipt of an indemnity 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 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.

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

     17. Governing Law. 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.

     18. Survival of Representations, Warranties and Agreements. All representations and
warranties of the Company and the holder hereof contained herein shall survive the Date of
Grant,
the exercise or conversion of this Warrant (or any part hereof) or the termination or
expiration of
rights hereunder. All agreements of the Company and the holder hereof contained herein shall
survive indefinitely until, by their respective terms, they are no longer operative.

     19. Remedies, In case any one or more of the covenants and agreements contained in
this
Warrant shall have been breached, the holders hereof (in the case of a breach by the Company),
or
the Company (in the case of a breach by a holder), may proceed to protect and enforce their or
its
rights either by suit in equity and/or by action at law, including, but not limited to, an
action for
damages as a result of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Warrant.

-11-

 

     20. No
Impairment of Rights. The Company will not, by amendment of its Charter or
through any other means, avoid or seek to avoid the observance or performance of any of the
terms
of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in
the taking of all such action as may be necessary or appropriate in order to protect the
rights of the
holder of this Warrant against impairment.

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

     22. Recovery
of Litigation Costs. If any legal action or other proceeding is brought
for
the enforcement of this Warrant, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Warrant, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys’ fees and other
costs
incurred in that action or proceeding, in addition to any other relief to which it or they may
be
entitled.

     23. Entire
Agreement; Modification. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and supersedes all
prior and
contemporaneous agreements, representations, and undertakings of the parties, whether
oral or
written, with respect to such subject matter.

-12-

 

     The Company has caused this Warrant to be duly executed and delivered as of the Date
of Grant specified above.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	REPLIDYNE, INC.
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Title	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Address: 
	1450 Infinite Drive	 	 	 	 
	 

	 	 	 	 	 	Louisville, CO 80027	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Accepted and Agreed:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Address:
	 	 	 	 	 	 	 	 	 

-13-

 

EXHIBIT A-1

NOTICE OF EXERCISE

To: Replidyne, Inc. (the “Company”)

     1. The undersigned hereby:

	 	o	 	elects to purchase___shares of [Series A Convertible Preferred Stock]
[Common Stock] of the Company pursuant to the terms of the attached Warrant, and tenders herewith
payment of the purchase price of such shares in full, or
	 
	 	o	 	elects to exercise its net issuance rights pursuant to Section 10.2 of the
attached Warrant with respect to___Shares of [Series A Convertible
Preferred Stock] [Common Stock].

     2. Please
issue a certificate or certificates representing___shares in the name of the undersigned or in such other name or names as are specified below:

 

(Name)

 

 

(Address)

     3. The undersigned represents that the aforesaid shares are being acquired for the account
of the undersigned for investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of distributing or reselling
such shares, all except as in compliance with applicable securities laws.

	 	 	 	 	 
	 

	 	 	 	 

(Signature)

	 
	 
(Date)

	 	 	 	 

 

 

EXHIBIT A-2

NOTICE OF EXERCISE

To: Replidyne, Inc. (the “Company”)

     1. Contingent upon and effective immediately prior to the closing (the “Closing”) of the
Company’s public offering contemplated by the Registration Statement on Form S___,
filed___, 200___, the undersigned hereby:

     o elects to purchase___shares of [Series A Convertible Preferred Stock]
[Common Stock] of the Company (or such lesser number of shares as may be sold on behalf of the
undersigned at the Closing) pursuant to the terms of the attached Warrant, or

     o elects to exercise its net issuance rights pursuant to Section 10.2 of the attached
Warrant with respect to___Shares of [Series A Convertible Preferred Stock] [Common Stock].

     2. Please deliver to the custodian for the selling shareholders a stock certificate
representing such___shares.

     3. The undersigned has instructed the custodian for the selling shareholders to deliver to
the Company $___or, if less, the net proceeds due the undersigned from the sale of shares in
the aforesaid public offering. If such net proceeds are less than the purchase price for such
shares, the undersigned agrees to deliver the difference to the Company prior to the Closing.

	 	 	 	 	 
	 

	 	 	 	 

(Signature)

	 
	 
(Date)

	 	 	 	 

 

 

EXHIBIT B

CHARTER

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