Exhibit 10.3
THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE
SECURITIES LAWS OR IMPLANT SCIENCES CORPORATION SHALL HAVE RECEIVED
AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
AMENDED AND RESTATED
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
IMPLANT SCIENCES
CORPORATION
Expires December 10, 2013
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Number of
Shares: 1,000,000
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Date of
Issuance: December 10, 2008
FOR VALUE RECEIVED, subject to the provisions
hereinafter set forth, the undersigned, Implant Sciences
Corporation., a Massachusetts corporation (together with its
successors and assigns, the “ Issuer ”), hereby
certifies that DMRJ Group LLC or its registered assigns is entitled
to subscribe for and purchase, during the period specified in this
Warrant, up to One Million (1,000,000) shares (subject to
adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock of the Issuer,
at an exercise price per share equal to the Warrant Price then in
effect, subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. Capitalized terms used
in this Warrant and not otherwise defined herein shall have the
respective meanings specified in Section 9 hereof.
1.
Term . The right to subscribe for and purchase
shares of Warrant Stock represented hereby shall commence on
December 10, 2008 and shall expire at 5:00 p.m., eastern time, on
December 10, 2013 (such period being the “ Term
”).
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Method of
Exercise Payment; Issuance of New Warrant; Transfer and
Exchange .
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(a)
Time of Exercise . The purchase rights
represented by this Warrant may be exercised in whole or in part at
any time and from time to time during the Term commencing on
December 10, 2008.
(b)
Method of Exercise . The Holder hereof may
exercise this Warrant, in whole or in part, by the surrender of
this Warrant (with the exercise form attached hereto duly executed)
at the principal office of the Issuer, and by the payment to the
Issuer of an amount of consideration therefor equal to the Warrant
Price in effect on the date of such exercise multiplied by the
number of shares of Warrant Stock with respect to which this
Warrant is then being exercised, payable at such Holder’s
election (i) by certified or official bank check or by wire
transfer to an account designated by the Issuer, (ii) by
“cashless exercise” in accordance with the provisions
of subsection (c) of this Section 2, or (iii) by a combination of
the foregoing methods of payment selected by the Holder of this
Warrant.
(c)
Cashless Exercise . Notwithstanding any
provisions herein to the contrary, if the Per Share Market Value of
one share of Common Stock is greater than the Warrant Price (at the
date of calculation as set forth below), in lieu of exercising this
Warrant by payment of cash, the Holder may exercise this Warrant by
a cashless exercise and shall receive the number of shares of
Common Stock equal to an amount (as determined below) by surrender
of this Warrant at the principal office of the Issuer together with
the properly endorsed Notice of Exercise in which event the Issuer
shall issue to the Holder a number of shares of Common Stock
computed using the following formula:
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the number of
shares of Common Stock to be issued to the Holder.
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the number of
shares of Common Stock purchasable upon exercise of all of the
Warrant or, if only a portion of the Warrant is being exercised,
the portion of the Warrant being exercised.
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B
= the
Per Share Market Value of one share of Common Stock.
Notwithstanding anything herein to the contrary,
on the last day of the Term, this Warrant shall be automatically
exercised via cashless exercise pursuant to this Section
2(c).
(d)
Issuance of Stock Certificates . In the event of
any exercise of the rights represented by this Warrant in
accordance with and subject to the terms and conditions hereof, (i)
certificates for the shares of Warrant Stock so purchased shall be
dated the date of such exercise and delivered to the Holder hereof
within a reasonable time, not exceeding three (3) Trading Days
after such exercise (the “ Delivery Date ”) or,
if the Issuer’s Securities are eligible for such manner of
delivery, then at the request of the Holder, issued and delivered
to the Depository Trust Company (“ DTC ”)
account on the Holder’s behalf via the Deposit Withdrawal
Agent Commission System (“ DWAC ”), within a
reasonable time, not exceeding three (3) Trading Days after such
exercise, and the Holder hereof shall be deemed for all purposes to
be the Holder of the shares of Warrant Stock so purchased as of the
date of such exercise and (ii) unless this Warrant has expired, a
new Warrant representing the number of shares of Warrant Stock, if
any, with respect to which this Warrant shall not then have been
exercised (less any amount thereof which shall have been canceled
in payment or partial payment of the Warrant Price as hereinabove
provided) shall also be issued to the Holder hereof at the
Issuer’s expense within such time.
(e)
Transferability of Warrant . Subject to Section
2(g), this Warrant may be transferred, in whole or in part, by a
Holder without the consent of the Issuer. If transferred
pursuant to this paragraph, this Warrant may be transferred on the
books of the Issuer by the Holder hereof in person or by the
Holder’s duly authorized attorney, upon surrender of this
Warrant at the principal office of the Issuer, properly endorsed
(by the Holder executing an assignment in the form attached hereto)
and upon payment of any necessary transfer tax or other
governmental charge imposed upon such transfer. This
Warrant is exchangeable at the principal office of the Issuer for
Warrants for the purchase of the same aggregate number of shares of
Warrant Stock, each new Warrant to represent the right to purchase
such number of shares of Warrant Stock as the Holder hereof shall
designate at the time of such exchange. All Warrants
issued on transfers or exchanges shall be dated the Original Issue
Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant
thereto.
(f)
Continuing Rights of Holder . The Issuer will, at
the time of or at any time after each exercise of this Warrant,
upon the request of the Holder hereof, acknowledge in writing the
extent, if any, of its continuing obligation to afford to such
Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this
Warrant, provided that if any such Holder shall fail to make
any such request, the failure shall not affect the continuing
obligation of the Issuer to afford such rights to such
Holder.
(g)
Compliance with Securities Laws.
(i) The
Holder of this Warrant, by acceptance hereof, acknowledges that
this Warrant and the shares of Warrant Stock to be issued upon
exercise hereof are being acquired solely for the Holder’s
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities
Act and any applicable state securities laws.
(ii) Except
as provided in paragraph (iii) below, this Warrant and all
certificates representing shares of Warrant Stock issued upon
exercise hereof shall be stamped or imprinted with a legend in
substantially the following form:
THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE
SECURITIES LAWS OR IMPLANT SCIENCES CORPORATION SHALL HAVE RECEIVED
AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER
THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
(iii) The
restrictions imposed by this subsection (g) upon the transfer of
this Warrant or the shares of Warrant Stock to be purchased upon
exercise hereof shall terminate (A) when such securities shall have
been resold pursuant to an effective registration statement under
the Securities Act, (B) upon the Issuer’s receipt of an
opinion of counsel, in form and substance reasonably satisfactory
to the Issuer, addressed to the Issuer to the effect that such
restrictions are no longer required to ensure compliance with the
Securities Act and state securities laws, or (C) upon the
Issuer’s receipt of other evidence reasonably satisfactory to
the Issuer that such registration and qualification under the
Securities Act and state securities laws are not required. Whenever
such restrictions shall cease and terminate as to any such
securities, the Holder thereof shall be entitled to receive from
the Issuer (or its transfer agent and registrar), without expense
(other than applicable transfer taxes, if any), new Warrants (or,
in the case of shares of Warrant Stock, new stock certificates) of
like tenor not bearing the applicable legend required by paragraph
(ii) above relating to the Securities Act and state securities
laws.
In addition to any other rights available to the
Holder, if the Issuer fails to cause its transfer agent to transmit
to the Holder a certificate or certificates representing
the Warrant Stock pursuant to an exercise on or before the Delivery
Date (or, in the case of any exercise of this Warrant after the six
month anniversary of the Original Issue Date, any such certificate
representing Warrant Stock contains any legend restricting transfer
(including any legend set forth in Section 2(g)(ii) above)), and if
after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Warrant
Stock which the Holder anticipated receiving upon such exercise (a
“ Buy-In ”), then the Issuer shall (1) pay in
cash to the Holder the amount by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for
the
shares of
Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of shares of Warrant Stock that the
Issuer was required to deliver to the Holder in connection with the
exercise at issue times, (B) the price at which the sell order
giving rise to such purchase obligation was executed, and (2) at
the option of the Holder, either reinstate the portion of the
Warrant and equivalent number of shares of Warrant Stock for which
such exercise was not honored or deliver to the Holder the number
of shares of Common Stock that would have been issued had the
Issuer timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In
with respect to an attempted exercise of shares of Common Stock
with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the immediately
preceding sentence the Issuer shall be required to pay the Holder
$1,000. The Holder shall provide the Issuer written
notice indicating the amounts payable to the Holder in respect of
the Buy-In, together with applicable confirmations and other
evidence reasonably requested by the Issuer. Nothing
herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or
injunctive relief with respect to the Issuer’s failure to
timely deliver certificates representing shares of Common Stock
upon exercise of this Warrant as required pursuant to the terms
hereof.
3.
Stock Fully Paid; Reservation and Listing of Shares;
Covenants .
(a)
Stock Fully Paid . The Issuer represents,
warrants, covenants and agrees that all shares of Warrant Stock
which may be issued upon the exercise of this Warrant or otherwise
hereunder will, upon issuance, be duly authorized, validly issued,
fully paid and non-assessable and free from all taxes, liens and
charges created by or through Issuer. The Issuer further
covenants and agrees that during the period within which this
Warrant may be exercised, the Issuer will at all times have
authorized and reserved for the purpose of the issue upon exercise
of this Warrant a number of shares of Common Stock equal to at
least 150% of the aggregate number of shares of Common Stock
exercisable hereunder to provide for the exercise of this Warrant
(without regard to limitations on exercisability set forth in
Section 8).
(b)
Reservation . If any shares of Common Stock
required to be reserved for issuance upon exercise of this Warrant
or as otherwise provided hereunder require registration or
qualification with any governmental authority under any federal or
state law before such shares may be so issued, the Issuer will in
good faith use its best efforts as expeditiously as possible at its
expense to cause such shares to be duly registered or
qualified. If the Issuer shall list any shares of Common
Stock on any securities exchange or market it will, at its expense,
list thereon, maintain and increase when necessary such listing,
of, all shares of Warrant Stock from time to time issued upon
exercise of this Warrant or as otherwise provided hereunder, and,
to the extent permissible under the applicable securities
exchange’s rules, all unissued shares of Warrant Stock which
are at any time issuable hereunder, so long as any shares of Common
Stock shall be so listed. The Issuer will also so list
on each securities exchange or market, and will maintain such
listing of, any other securities which the Holder of this Warrant
shall be entitled to receive upon the exercise of this Warrant if
at the time any securities of the same class shall be listed on
such securities exchange or market by the Issuer.
(c)
Covenants . The Issuer shall not by any action
including, without limitation, amending the Articles of
Organization or the by-laws of the Issuer, or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other action, avoid
or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of
the Holder hereof against dilution (to the extent specifically
provided herein) or impairment. Without limiting the
generality of the foregoing, the Issuer will (i) not increase the
par value of its Common Stock to exceed the then effective Warrant
Price, (ii) not amend or modify any provision of the Certificate
Articles of Organization or by-laws of the Issuer in any manner
that would adversely affect the rights of the Holders of the
Warrants, (iii) take all such action as may be reasonably necessary
in order that the Issuer may validly and legally issue fully paid
and nonassessable shares of Common Stock, free and clear of any
liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (iv) use
its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction
thereof as may be reasonably necessary to enable the Issuer to
perform its obligations under this Warrant.
(d)
Loss, Theft, Destruction of Warrants . Upon
receipt of evidence satisfactory to the Issuer of the ownership of
and the loss, theft, destruction or mutilation of any Warrant and,
in the case of any such loss, theft or destruction, upon receipt of
indemnity or security satisfactory to the Issuer or, in the case of
any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost,
stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
and representing the right to purchase the same number of shares of
Common Stock.
4.
Adjustment of Warrant Price and Warrant Share Number
. The number of shares of Common Stock for which this
Warrant is exercisable, and the price at which such shares may be
purchased upon exercise of this Warrant, shall be subject to
adjustment from time to time as set forth in this Section 4. The
Issuer shall give the Holder notice of any event described below
which requires an adjustment pursuant to this Section 4 in
accordance with Section 5.
(a)
Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale .
(i) In
case the Issuer after the Original Issue Date shall do any of the
following (each, a “ Triggering Event ”): (a)
consolidate with or merge into any other Person and the Issuer
shall not be the continuing or surviving corporation of such
consolidation or merger, or (b) permit any other Person to
consolidate with or merge into the Issuer and the Issuer shall be
the continuing or surviving Person but, in connection with such
consolidation or merger, any Capital Stock of the Issuer shall be
changed into or exchanged for Securities of any other Person or
cash or any other property, or (c) transfer all or substantially
all of its properties or assets to any other Person, or (d) effect
a capital reorganization or reclassification of its Capital Stock,
then, and in the case of each such Triggering Event, proper
provision shall be made so that, upon the basis and the terms and
in the manner provided in this Warrant, the Holder of this Warrant
shall be entitled upon the exercise hereof at any time after the
consummation of such Triggering
Event, to the
extent this Warrant is not exercised prior to such Triggering
Event, to receive at the Warrant Price in effect at the time
immediately prior to the consummation of such Triggering Event in
lieu of the Common Stock issuable upon such exercise of this
Warrant prior to such Triggering Event, the Securities, cash and
property to which such Holder would have been entitled upon the
consummation of such Triggering Event if such Holder had exercised
the rights represented by this Warrant (without giving effect to
the limitations on exercise set forth in Section 8 hereof)
immediately prior thereto (including the right to elect the type of
consideration, if applicable), subject to adjustments (subsequent
to such corporate action) as nearly equivalent as possible to the
adjustments provided for elsewhere in this Section
4. Unless the surviving entity in any such Triggering
Event is a public company under the Securities Exchange Act of
1934, the common equity securities of which are traded or quoted on
a national securities exchange or the OTC Bulletin Board (a “
Qualifying Entity ”), the Holder, at its option, shall
be permitted to require that the Issuer pay to the Holder an amount
equal to the Black-Scholes value of this Warrant.
(ii) Notwithstanding
anything contained in this Warrant to the contrary and so long as
the surviving entity is a Qualifying Entity, the Issuer will not be
deemed to have effected any Triggering Event if, prior
to the consummation thereof, each Person (other than the Issuer)
which may be required to deliver any Securities, cash or property
upon the exercise of this Warrant as provided herein shall assume,
by written instrument delivered to the Holder of this Warrant and
reasonably satisfactory to the Holder, (A) the obligations of the
Issuer under this Warrant (and if the Issuer shall survive the
consummation of such Triggering Event, such assumption shall be in
addition to, and shall not release the Issuer from, any continuing
obligations of the Issuer under this Warrant) and (B) the
obligation to deliver to such Holder such shares of Securities,
cash or property as, in accordance with the foregoing provisions of
this subsection (a), such Holder shall be entitled to receive, and
such Person shall have similarly delivered to such Holder, an
opinion of counsel for such Person, which shall be reasonably
satisfactory to the Holder, stating that this Warrant shall
thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this
subsection (a)) shall be applicable to the Securities, cash or
property which such Person may be required to deliver upon any
exercise of this Warrant or the exercise of any rights pursuant
hereto.
(b)
Stock Dividends, Subdivisions and Combinations
. If at any time the Issuer shall:
(i) set
a record date or take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend payable in,
or other distribution of, shares of Common Stock,
(ii) subdivide
its outstanding shares of Common Stock into a larger number of
shares of Common Stock, or
(iii) combine
its outstanding shares of Common Stock into a smaller number of
shares of Common Stock,
then (1) the
number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event
shall be adjusted to equal the number of shares of Common Stock
which a record holder of the same number of shares of Common Stock
for which this Warrant is exercisable immediately prior to the
occurrence of such event would own or be entitled to receive after
the happening of such event (without giving effect to the
limitations on exercise set forth in Section 8 hereof), and (2) the
Warrant Price then in effect shall be adjusted to equal (A) the
Warrant Price then in effect multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately
prior to the adjustment (without giving effect to the limitations
on exercise set forth in Section 8 hereof) divided by (B) the
number of shares of Common Stock for which this Warrant is
exercisable immediately after such adjustment (without giving
effect to the limitations on exercise set forth in Section 8
hereof).
(c)
Adjustment upon Issuance of shares of Common Stock
. If at any time the Issuer issues or sells, or in
accordance with this Section 4(c) is deemed to have issued or sold,
any shares of Common Stock (including the issuance or sale of
shares of Common Stock owned or held by or for the account of the
Issuer for a consideration per share (the " New Issuance
Price ") less than a price (the " Applicable Price ")
equal to the Warrant Price in effect immediately prior to such
issue or sale or deemed issuance or sale (the foregoing a "
Dilutive Issuance "), then immediately after such Dilutive
Issuance, the Warrant Price then in effect shall be reduced to an
amount equal to the New Issuance Price. Upon each such
adjustment of the Warrant Price hereunder, the number of shares of
Warrant Stock shall be adjusted to the number of shares of Common
Stock determined by multiplying the Warrant Price in effect
immediately prior to such adjustment by the number of shares of
Common Stock acquirable upon exercise of this W
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