NEITHER THIS
SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
COMMON STOCK PURCHASE
WARRANT
To Purchase [
] Shares of Common Stock of
THIS COMMON
STOCK PURCHASE WARRANT (the “ Warrant
”) certifies that, for value received, Empire Asset
Management Company (the “ Holder ”), is
entitled, upon the terms and subject to the limitations on exercise
and the conditions hereinafter set forth, at any time on or after
the sixth (6th) month anniversary of the date hereof (the “
Initial Exercise Date ”) and on or prior to the
close of business on the fifth (5th) year anniversary of the date
of issuance of this Warrant (the “ Termination
Date ”) but not thereafter, to subscribe for and
purchase from Artes Medical, Inc., a Delaware corporation (the
“ Company ”), up to [
] shares (the “ Warrant Shares ”) of
Common Stock, par value $0.001 per share, of the Company (the
“ Common Stock ”). The purchase price of
one share of Common Stock under this Warrant shall be equal to the
Exercise Price, as defined in Section 2(b).
1.
Definitions . The Holder and the Company are parties to that
certain Placement Agent Agreement, dated as of September 17,
2008 (the “ Placement Agent Agreement ”).
Pursuant to the Placement Agent Agreement, the Holder has acted as
placement agent in connection with the transactions contemplated by
the Subscription Agreements (the “ Subscription
Agreements ”), of even date herewith, by and among
the Company and the investors identified on the signature pages to
the Subscription Agreements. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in the
Subscription Agreements.
(a)
Exercise of Warrant . Exercise of the purchase rights
represented by this Warrant may be made, in whole or in part, at
any time or times on or after the Initial Exercise Date and on or
before the Termination Date by delivery to the Company of a duly
executed facsimile copy of the Notice of Exercise Form annexed
hereto (or such other office or agency of
the Company as
it may designate by notice in writing to the registered Holder at
the address of such Holder appearing on the books of the Company);
provided, however , within five (5) Trading Days of the
date said Notice of Exercise is delivered to the Company, the
Holder shall have surrendered this Warrant to the Company and the
Company shall have received payment of the aggregate Exercise Price
of the shares thereby purchased by wire transfer or cashier’s
check drawn on a United States bank.
(b)
Exercise Price . The exercise price of the Common Stock
under this Warrant shall be $[___ 1 ],
subject to adjustment hereunder (the “ Exercise
Price ”).
(c)
Cashless Exercise . This Warrant may be exercised at any
time by means of a “cashless exercise” in which the
Holder shall be entitled to receive a certificate for the number of
Warrant Shares equal to the quotient obtained by dividing [(A-B)
(X)] by (A), where:
|
|
(A)
|
|
=
the VWAP (as defined below) on the Trading Day immediately
preceding the date of such election;
|
|
|
|
|
|
|
|
(B)
|
|
=
the Exercise Price of this Warrant, as adjusted; and
|
|
|
|
|
|
|
|
(X)
|
|
=
the number of Warrant Shares issuable upon exercise of this Warrant
in accordance with the terms of this Warrant by means of a
cash exercise rather than a cashless
exercise.
|
“
VWAP ” means, for any date, the price
determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market
on which the Common Stock is then listed or quoted as reported by
Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m.
Eastern Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is
not then listed or quoted on a Trading Market and if prices for the
Common Stock are then quoted on the OTC Bulletin Board, the volume
weighted average price of the Common Stock for such date (or the
nearest preceding date) on the OTC Bulletin Board; (c) if the
Common Stock is not then listed or quoted on the OTC Bulletin Board
and if prices for the Common Stock are then reported in the
“Pink Sheets” published by the Pink Sheets, LLC (or a
similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the
Common Stock so reported; or (c) in all other cases, the fair
market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the
Company.
(d)
Exercise Limitations . Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2(c) or
otherwise, to the extent that after giving effect to such issuance
after exercise, Holder (together with Holder’s affiliates),
as set forth on the applicable Notice of Exercise, would
beneficially own in excess of 4.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to such
issuance. For
|
|
|
|
|
1
|
|
There will two
separate placement agent warrants with different exercise prices.
The placement agent warrant related to the common stock will have
an exercise price equal to the purchase price, and the placement
agent warrant related to shares of common stock underlying the
investor warrants will have an exercise price equal to the exercise
price contained in the investor warrants.
|
2
purposes of the
foregoing sentence, the number of shares of Common Stock
beneficially owned by Holder and its affiliates shall include the
number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which the determination of such sentence is
being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (A) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by Holder
or any of its affiliates and (B) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the
Company (including, without limitation, any other shares of Shares
or Warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by
Holder or any of its affiliates. Except as set forth in the
preceding sentence, for purposes of this Section 2(d),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act, it being acknowledged by Holder that the
Company is not representing to Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and Holder is
solely responsible for any schedules required to be filed in
accordance therewith. To the extent that the limitation contained
in this Section 2(d) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by
Holder) and of which a portion of this Warrant is exercisable shall
be in the sole discretion of Holder, and the submission of a Notice
of Exercise shall be deemed to be each Holder’s determination
of whether this Warrant is exercisable (in relation to other
securities owned by Holder) and of which portion of this Warrant is
exercisable, in each case subject to such aggregate percentage
limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. For purposes of this
Section 2(d), in determining the number of outstanding shares
of Common Stock, Holder may rely on the number of outstanding
shares of Common Stock as reflected in (x) the Company’s
most recent Form 10-Q or Form 10-K, as the case may be, (y) a
more recent public announcement by the Company or (z) any
other notice by the Company or the Company’s transfer agent
setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of Holder, the
Company shall within two Trading Days confirm orally and in writing
to Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this
Warrant, by Holder or its affiliates since the date as of which
such number of outstanding shares of Common Stock was reported. The
provisions of this Section 2(d) may be waived by Holder, at the
election of Holder, upon not less than 61 days’ prior
notice to the Company, and the provisions of this Section 2(d)
shall continue to apply until such 61 st day (or such later date, as determined by
Holder, as may be specified in such notice of waiver).
(e)
Mechanics of Exercise .
(i)
Authorization of Warrant Shares . The Company covenants that
all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free
from all taxes, liens and charges imposed by the Company in respect
of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
(ii)
Delivery of Certificates Upon Exercise . Certificates for
shares purchased hereunder shall be transmitted by the transfer
agent of the Company to the Holder by crediting the account of the
Holder’s prime broker with the Depository Trust Company
through
3
its Deposit
Withdrawal Agent Commission (“ DWAC ”)
system if the Company is a participant in such system, and
otherwise by physical delivery to the address specified by the
Holder in the Notice of Exercise within three (3) Trading Days
from the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant and payment of the aggregate Exercise
Price as set forth above (“ Warrant Share Delivery
Date ”). This Warrant shall be deemed to have been
exercised on the date the Exercise Price and completed Notice of
Exercise are received by the Company. The Warrant Shares shall be
deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date
the Warrant has been exercised by payment to the Company of the
Exercise Price and all taxes required to be paid by the Holder, if
any, pursuant to Section 2(e)(vi) prior to the issuance of
such shares, have been paid.
(iii)
Delivery of New Warrants Upon Exercise . If this Warrant
shall have been exercised in part, the Company shall, at the time
of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of
Holder to purchase the unpurchased Warrant Shares called for by
this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
(iv)
Buy-In Rights . In addition to any other rights available to
a Holder, if the Company fails to deliver to the Holder a
certificate representing Warrant Shares by the fifth Trading Day
after the date on which delivery of such certificate is required by
this Warrant, and if after such fifth Trading Day the Holder
purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of
the Warrant Shares that the Holder anticipated receiving from the
Company (a “ Buy-In ”), then the Company shall,
within five Trading Days after the Holder’s request, honor
its obligation to deliver to the Holder a certificate or
certificates representing such Common Stock and pay cash to the
Holder in an amount equal to the excess (if any) of the amount
equal to the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased over the product of (A) such number of shares of Common
Stock, times (B) the Closing Price on the date of the event
giving rise to the Company’s obligation to deliver such
certificate.
(v)
No Fractional Shares or Scrip . No fractional shares or
scrip representing fractional shares shall be issued upon the
exercise of this Warrant. As to any fraction of a share which
Holder would otherwise be entitled to purchase upon such exercise,
the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the
Exercise Price.
(vi)
Charges, Taxes and Expenses . Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall
be paid by the Company, and such certificates shall be issued in
the name of the Holder or in such name or names as may be directed
by the Holder; provided, however , that in the event
certificates for Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder; and the Company may require, as
a condition thereto, the payment of a sum sufficient to reimburse
it for any transfer tax incidental thereto.
4
(vii)
Closing of Books . The Company will not close its
stockholder books or records prior to the Termination Date in any
manner which prevents the timely exercise of this Warrant, pursuant
to the terms hereof.
(a)
Stock Dividends and Splits . If the Company, at any time
while this Warrant is outstanding: (A) pays a stock dividend
or otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by the Company
pursuant to this Warrant), (B) subdivides outstanding shares
of Common Stock into a larger number of shares, (C) combines
(including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by
reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock (excluding treasury shares, if
any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares
issuable upon exercise of this Warrant shall be proportionately
adjusted. Any adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.
(b)
Subsequent Placements . Subject to Section 3(i), if the
Company, at any time during the one year period following the date
of this Warrant (the “ Participation Right
Period ”), shall complete a Subsequent Placement at
an effective price per share less than the then effective Exercise
Price (such lower price, the “ Base Share Price
” and such issuances collectively, a “ Dilutive
Issuance ”), as adjusted hereunder (if the holder of
the Equity Securities so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating
conversion, exercise or exchange prices or otherwise, or due to
warrants, options or rights per share which is issued in connection
with such issuance, be entitled to receive shares of Common Stock
at an effective price per share which is less than the Exercise
Price, such issuance shall be deemed to have occurred for less than
the Exercise Price on such date of the Dilutive Issuance), then,
the Exercise Price shall be reduced and only reduced to equal the
Base Share Price. Such adjustment shall be made during the
Participation Right Period whenever such Equity
Securities
|
