EXHIBIT 4.2
THIS SECURITY HAS NOT 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 INCLUDING, WITHOUT
LIMITATION, PURSUANT TO RULE 144 UNDER SAID ACT OR PURSUANT TO A
PRIVATE SALE EFFECTED UNDER APPLICABLE FORMAL OR INFORMAL SEC
INTERPRETATION OR GUIDANCE, SUCH AS A SO-CALLED
“4(1) AND A HALF” SALE. THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED
IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED
BY SUCH SECURITIES.
STOCK PURCHASE
WARRANT
TO SUBSCRIBE FOR AND PURCHASE
COMMON STOCK OF
NEUROMETRIX, INC.
THIS CERTIFIES THAT, for value
received,
,
or registered assigns, (herein referred to as the
“Purchaser” or
“holder” ), is entitled to subscribe for
and purchase from NEUROMetrix, Inc., a Delaware corporation
(herein called the “Company” ), at the
exercise price specified below (subject to adjustment as noted
below) at any time beginning on the date that is the earlier of
(x) (1)
and (y) immediately prior to consummation of a Change of
Control (as defined below) to, and including
,
2014(2) (subject to extension as provided below, the
“Expiration Date” ),
( )
fully paid and nonassessable shares (
“Shares” ) of common stock, par value
$.0001 per share (herein the “Common
Stock” ) (subject to adjustment as noted
below). This Stock Purchase Warrant (this
“Warrant” ) has been issued pursuant to a
Securities Purchase Agreement, dated as of
September , 2009 (the
“Agreement” ), between the Purchaser and
the Company.
The warrant exercise price (subject
to adjustment as noted below) shall be
$ per
Share (the “Warrant Purchase Price”
).
This Warrant is subject to the
following provisions, terms and conditions:
(1) Insert date that is
180 days after the date hereof.
(2) Insert date that is
five years from the date hereof.
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1.
EXERCISE OF WARRANT.
The rights
represented by this Warrant may be exercised by the holder hereof,
in whole or in part, by written notice of exercise delivered to the
Company and by the surrender of this Warrant (properly endorsed if
required) at the principal office of the Company and upon payment
to it by check of the Warrant Purchase Price for such Shares, or if
available, pursuant to the cashless exercise procedure specified in
Section 2 below; provided, however, that any such exercise
made in connection with a Change in Control, may be conditioned
upon the consummation of such Change in Control and payment with
respect to such exercise shall be made at the time of the
consummation of such Change in Control.
2.
NET EXERCISE OF
WARRANT. This Warrant may also be
exercised in whole or in part, at such time by means of a
“cashless
exercise” in which the holder shall be
entitled to receive a certificate for the number of Shares equal to
the quotient obtained by dividing [(A-B)(X)] by (A),
where:
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(A) =
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the VWAP on the trading day
immediately preceding the date on which the holder elects to
exercise this Warrant by means of a “cashless
exercise,” as set forth in the applicable Notice of
Exercise;
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(B) =
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the Warrant Purchase Price, as
adjusted hereunder; and
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(X) =
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the number of Shares that would be
issuable upon exercise of this Warrant in accordance with the terms
of this Warrant if such exercise were by means of a cash exercise
rather than a cashless exercise.
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“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 L.P.
(based on a trading day from 9:30 a.m. (New York City time) to
4:02 p.m. (New York City time), (b) if the OTC Bulletin
Board is not a Trading Market, 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 for trading on the OTC Bulletin Board and if
prices for the Common Stock are then reported in the “Pink
Sheets” published by Pink OTC Markets, Inc. (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 (d) 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 Board of
Directors of the Company and the holders of a majority in interest
of the Warrants being exercised for which the calculation of VWAP
is required in order to determine the exercise price of such
Warrants.
“Trading
Market” means
any of the following markets or exchanges on which the Common Stock
is listed or quoted for trading on the date in question: the NYSE
AMEX, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, or the New York Stock Exchange (or any
successors to any of the foregoing).
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3.
BENEFICIAL OWNERSHIP.
(a)
Notwithstanding
anything to the contrary contained in this Warrant (other than the
provisions of Section 3(b) below), the Company shall not
effect any exercise of this Warrant, and a holder shall not have
the right to exercise any portion of this Warrant to the extent
(but only to the extent) that, after giving effect to such issuance
after exercise, the holder (together with any person acting as a
group with the holder or the holder’s affiliates) would
beneficially own in excess of 9.99% (the “Maximum Percentage”
) of the
outstanding shares of Common Stock. To the extent the above
limitation applies, the determination of whether this Warrant shall
be exercisable (vis-à-vis other convertible, exercisable or
exchangeable securities owned by the holder) and of which warrants
shall be exercisable (as among all warrants owned by the holder)
shall, subject to such Maximum Percentage limitation, be determined
on the basis of the first submission to the Company for conversion,
exercise or exchange (as the case may be). No prior inability to
exercise this Warrant pursuant to this paragraph shall have any
effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of
exercisability. For the purposes of this paragraph,
beneficial ownership and all determinations and calculations
(including, without limitation, with respect to calculations of
percentage ownership and as to the determination of any group)
shall be determined by the holder in accordance with
Section 13(d) of the Securities Exchange Act of 1934
(the “Exchange
Act” ) and the rules and
regulations promulgated thereunder. The provisions of this
paragraph shall be implemented in a manner otherwise than in strict
conformity with the terms of this paragraph to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Maximum Percentage beneficial
ownership limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such
Maximum Percentage limitation. The limitations contained in
this paragraph shall apply to a successor holder of this
Warrant. For any reason at any time, upon the written or oral
request of the holder, the Company shall within one
(1) business day confirm orally and in writing to the holder
the number of shares of Common Stock then outstanding, including by
virtue of any prior conversion or exercise of convertible or
exercisable securities into Common Stock, including, without
limitation, pursuant to this Warrant or securities issued pursuant
to the Securities Purchase Agreement. Each delivery of an
Exercise Notice by the holder will constitute a representation by
the holder that it has evaluated the limitation set forth in this
paragraph and determined that issuance of the full number of Shares
requested by the holder in such Exercise Notice is permitted under
this paragraph.
(b)
The provisions of
Section 3(a) above shall not apply to any exercise by any
holder whose beneficial ownership of Common Stock immediately prior
to the issuance of this Warrant (together with any person acting as
a group with the holder and the holder’s affiliates) exceeds
the Maximum Percentage (an “Existing MP Holder”
),
provided , however , if at any time after the date
hereof an Existing MP Holder and its affiliates and any other
persons or entities whose beneficial ownership of Common Stock
would be aggregated with such Holders for purposes of
Section 13(d) of the Exchange Act (including shares held
by any “group” of which the holder is a member, but
excluding shares beneficially owned by virtue of the ownership of
securities or rights to acquire securities that have limitations on
the right to convert, exercise or purchase similar to the
limitation set forth herein) shall collectively beneficially own
the Maximum Percentage or less, then such holder may deliver a
written notice to the Company (an “MP
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Notice”
) providing that
such holder irrevocably elects to be subject to the provisions of
Section 3(a).
(c)
Notwithstanding
anything to the contrary contained in this Warrant, the Company
shall not effect any exercise of this Warrant (including if held by
an Existing MP Holder that has not delivered an MP Notice), and a
holder shall not have the right to exercise any portion of this
Warrant to the extent (but only to the extent) that, after giving
effect to such issuance after exercise, the holder (together with
any person acting as a group with the holder or the holder’s
affiliates) would beneficially own in excess of 19.99% (the
“Applicable
Percentage ”) of the outstanding
shares of Common Stock. To the extent the above limitation applies,
the determination of whether this Warrant shall be exercisable
(vis-à-vis other convertible, exercisable or exchangeable
securities owned by the holder) and of which warrants shall be
exercisable (as among all warrants owned by the holder) shall,
subject to such Applicable Percentage limitation, be determined on
the basis of the first submission to the Company for conversion,
exercise or exchange (as the case may be). No prior inability
to exercise this Warrant pursuant to this paragraph shall have any
effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of
exercisability. For the purposes of this paragraph,
beneficial ownership and all determinations and calculations
(including, without limitation, with respect to calculations of
percentage ownership and as to the determination of any group)
shall be determined by the holder in accordance with
Section 13(d) of the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder. The
provisions of this paragraph shall be implemented in a manner
otherwise than in strict conformity with the terms of this
paragraph to correct this paragraph (or any portion hereof) which
may be defective or inconsistent with the intended Applicable
Percentage beneficial ownership limitation herein contained or to
make changes or supplements necessary or desirable to properly give
effect to such Applicable Percentage limitation. The
limitations contained in this paragraph shall apply to a successor
holder of this Warrant. For any reason at any time, upon the
written or oral request of the holder, the Company shall within one
(1) business day confirm orally and in writing to the holder
the number of shares of Common Stock then outstanding, including by
virtue of any prior conversion or exercise of convertible or
exercisable securities into Common Stock, including, without
limitation, pursuant to this Warrant or securities issued pursuant
to the Securities Purchase Agreement. Each delivery of an
Exercise Notice by the holder will constitute a representation by
the holder that it has evaluated the limitation set forth in this
paragraph and determined that issuance of the full number of Shares
requested by the holder in such Exercise Notice is permitted under
this paragraph.
4.
ISSUANCE OF THE SHARES.
The Company
agrees that the Shares so purchased shall be and are deemed to be
issued to the holder hereof as the record owner of such Shares as
of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such Shares as
aforesaid. Subject to the provisions of the preceding
Section, within 3 business days after the rights represented by
this Warrant shall have been exercised, the Company shall cause its
transfer agent to issue the Shares so purchased to Purchaser in
book-entry format and deliver evidence of such issuance to
Purchaser, and, unless this Warrant has expired, a new Warrant
representing the number of Shares, if any, with respect to which
this Warrant shall not then have been exercised shall also be
delivered to the holder hereof within such time.
Notwithstanding anything herein to the contrary, in the event of an
exercise of this Warrant effective immediately prior to a Change of
Control (as defined below), the Shares
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purchased upon
such exercise shall be deemed issued and shall be issued
immediately prior to consummation of the Change of
Control.
5.
AUTHORIZATION OF SHARES.
The Company
represents and warrants that this Warrant has been duly authorized
by all necessary corporate action, has been duly executed and
delivered and is a legal and binding obligation of the Company,
enforceable against the Company in accordance with the terms of
this Warrant, except to the extent such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally. The Company
covenants and agrees that all Shares which may be issued upon the
exercise of the rights represented by this Warrant according to the
terms hereof or represented by the Common Stock will, upon issuance
and payment therefor, be duly authorized and issued, fully paid and
nonassessable. The Company further covenants and agrees that
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 issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a
sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant, free from
preemptive rights, rights of first refusal or other contingent
purchase rights other than those held by a holder of this Warrant
(as a result of holding this Warrant).
6.
CHARGES, TAXES AND EXPENSES.
The Company will
pay any documentary stamp taxes attributable to the issuance of
Shares of Common Stock upon the exercise of this
Warrant.
7.
ADJUSTMENTS OF WARRANT PURCHASE
PRICE AND NUMBER OF SHARES; STOCK SPLITS, ETC.
The above
provisions are, however, subject to the following:
(a)
The Warrant
Purchase Price shall, from and after the date of issuance of this
Warrant, be subject to adjustment from time to time as hereinafter
provided. Upon each adjustment of the Warrant Purchase Price,
the holder of this Warrant shall thereafter be entitled to
purchase,
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