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EXHIBIT 10.2
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. THIS WARRANT AND
THE UNDERLYING SECURITIES MAY NOT BE TRANSFERRED UNLESS
(I) THIS WARRANT AND THE UNDERLYING SECURITIES HAVE BEEN
REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT, (II) THIS
WARRANT AND THE UNDERLYING SECURITIES MAY BE SOLD PURSUANT TO RULE
144 OR (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE
MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR QUALIFICATION
UNDER APPLICABLE STATE SECURITIES LAWS.
WARRANT
THIS CERTIFIES THAT, for value received,
(the " Holder ") is
hereby granted a warrant to purchase
fully paid and nonassessable
shares (the " Shares ") of common stock, par value $0.01 per
share (the " Common Stock "), of ATS Medical, Inc., a
Minnesota corporation (the " Company "), at a price per
share equal to $2.35 plus (i) $0.125 if the warrant is being
exercised within one year of the Date of Grant (as defined below),
(ii) $0.50 if the warrant is being exercised after the expiration
of one year following the Date of Grant but prior to the expiration
of two (2) years following the Date of Grant, and (iii) $0.75
if the warrant is being exercised after the expiration of two
(2) years following the Date of Grant (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 "), upon the terms and subject to
the conditions hereinafter set forth. This warrant is being issued
on this 19 th day of December, 2008 (the " Date of
Grant ").
1. Term. The 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 until the seven (7) year
anniversary of the Date of Grant.
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, after the Date of Grant, in the manner
described below:
The Holder shall (i) surrender 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; or (ii) exercise the "net
issuance" right provided for in Section 9 hereof. In the event
of any exercise of the rights represented by this warrant pursuant
to this Section 2, certificates for the shares of stock so
purchased shall be delivered to the Holder hereof as soon as
practicable and in any event within three (3) business 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 practicable and in any event within such thirty-day period;
provided, however, if requested by the Holder of this warrant, the
Company shall use reasonable efforts to 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.
The person or persons in whose name(s) any
certificate(s) representing shares of Common Stock 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.
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 Common Stock to
provide for the exercise of the rights represented by this warrant.
If at any time during the term of this warrant the number of
authorized but unissued shares of Common Stock shall not be
sufficient to permit exercise of this warrant, the Company will
take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for
such purposes.
4. Adjustment of Warrant Price and Number
of Shares . The number of shares of Common Stock 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:
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(a)
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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
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 warrant), the Company, or such
successor or purchasing corporation, as the case may be, shall
(i) in the case of a merger described above, execute and
deliver to the Holder a new warrant (in form and substance
reasonably satisfactory to the Holder), so that the Holder shall
have the right to receive upon exercise of this warrant, at a total
purchase price equal to that payable upon the exercise of the
unexercised portion of this warrant, and in lieu of the shares of
Common Stock theretofore issuable upon exercise of this
warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such merger or sale
by a Holder of the number of shares of Common Stock then
purchasable under this warrant and (ii) in the case of a
reclassification or change in the securities issuable upon exercise
of this warrant described above, the Holder shall have the right to
receive, upon exercise of this warrant, at a total purchase price
equal to that payable upon the exercise of the unexercised portion
of this warrant, and (A) in lieu of the shares of Common Stock
theretofore issuable upon exercise of this warrant, the number of
shares of Common Stock then purchasable under this warrant upon
such reclassification or other change in the securities issuable
upon exercise of this warrant or (B) in lieu of cash
theretofore issuable upon exercise of this warrant, the amount of
cash then issuable under this warrant upon such reclassification or
other change in the securities issuable upon exercise of 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.
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(b)
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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 Common Stock, 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.
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(c)
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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 Common Stock payable in
Common Stock, 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 Common Stock outstanding
immediately prior to such dividend or distribution, and
(B) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such dividend
or distribution; or (ii) make any other distribution with
respect to Common Stock (except any distribution specifically
provided for in Sections 4(a) and 4(b)), then, in each such
case, 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 Common Stock as of the record date fixed
for the determination of the shareholders of the Company entitled
to receive such dividend or distribution.
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(d)
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Adjustment of Number of Shares . Upon each adjustment in
the Warrant Price, the number of shares of Common Stock purchasable
hereunder shall be adjusted, rounded up 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.
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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 acting 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
to the Holder of this warrant.
6. Fractional Shares . No fractional
shares of Common Stock 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 product
resulting from multiplying the then fair market value o
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