WARRANT AGREEMENTWarrant Agreement |
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DIOMED HOLDINGS, INC | DIOMED, INC | HERCULES TECHNOLOGY GROWTH CAPITAL, INC | WHICH MAY BE COMPANY. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL)
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933 ACT AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
WARRANT
AGREEMENT
To
Purchase Shares of the Common Stock of
DIOMED
HOLDINGS, INC.
Dated
as of September 28, 2007 (the “
Effective Date ”)
WHEREAS,
Diomed Holdings, Inc., a Delaware corporation (the
“
Company ”),
has entered into a Loan and Security Agreement of even date
herewith (the “
Loan Agreement ”)
with, Hercules Technology Growth Capital, Inc., a Maryland
corporation (the “
Warrantholder ”);
WHEREAS,
the Company desires to grant to Warrantholder, in
consideration for, among other things, the financial
accommodations provided for in the Loan Agreement, the right
to purchase shares of its Common Stock pursuant to this
Warrant Agreement (the “
Warrant ”);
NOW,
THEREFORE, in consideration of the Warrantholder executing and
delivering the Loan Agreement and providing the financial
accommodations contemplated therein, and in consideration of
the mutual covenants and agreements contained herein, the
Company and Warrantholder agree as follows:
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SECTION 1.
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GRANT
OF THE RIGHT TO PURCHASE COMMON STOCK.
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For
value received, the Company hereby grants to the
Warrantholder, and the Warrantholder is entitled, upon the
terms and subject to the conditions hereinafter set forth, to
subscribe for and purchase, from the Company, 86,957 fully
paid and non-assessable shares of the Common Stock (as defined
below) at a purchase price of $0.70 per share (the
“
Exercise Price ”).
The number and Exercise Price of such shares are subject to
adjustment as provided in Section 8. As used herein, the following
terms shall have the following meanings:
“
1934 Act ”
means the Securities Exchange Act of 1934, as amended.
“
Acknowledgment of Exercise ”
has the meaning given to it in Section 3(a).
“
Act ”
means the Securities Act of 1933, as amended.
“
Agreement ”
means this Warrant Agreement.
1.
“
Charter ”
means the Company’s Certificate of Incorporation or other
constitutional document, as the same may be amended from time to
time.
“
Claims ”
has the meaning given to it in Section 12(p).
“
Common Stock ”
means the Company’s common stock, $0.001 par value per
share.
“
Company ”
has the meaning given to it in the preamble to this
Warrant.
“
Effective Date ”
has the meaning given to it in the preamble to this
Warrant.
“
Exercise Price ”
has the meaning given to it in the preamble to this
Warrant.
“
Loan Agreement ”
has the meaning given to it in the preamble to this
Warrant.
“
Merger Event ”
means (i) a merger or consolidation involving the Company in which
(x) the Company is not the surviving entity, or (y) the outstanding
shares of the Company’s capital stock are otherwise converted
into or exchanged for shares of capital of another entity; or (ii)
the sale of all or substantially all of the assets of the
Company.
“
Net Issuance ”
has the meaning given to it in Section 3(a).
“
Notice of Exercise ”
has the meaning given to it in Section 3(a).
“
Preferred Stock ”
means the 2006 Preferred Stock of the Company, par value $0.001 per
share, and any other stock into or for which the 2006 Preferred
Stock may be converted or exchanged other than pursuant to its
terms.
“
Purchase Price ”
means, with respect to any exercise of this Warrant, an amount
equal to the Exercise Price as of the relevant time multiplied by
the number of shares of Common Stock requested to be exercised
under this Warrant pursuant to such exercise.
“
Rules ”
has the meaning given to it in Section 12(q).
“
Transfer Notice ”
has the meaning given to it in Section 11.
“
Warrant ”
has the meaning given to it in Section 2.
“
Warrant Term ”
has the meaning given to it in Section 2.
“
Warrantholder ”
has the meaning given to it in the preamble to this
Warrant.
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SECTION 2.
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TERM
OF THE WARRANT.
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Except
as otherwise provided for herein, the term of this Warrant
(the “
Warrant Term ”)
and the right to purchase Common Stock, as granted herein (the
“
Warrant ”)
shall commence on the Effective Date and shall be exercisable for a
period ending on 5:00 pm Eastern time on the day of the fifth
anniversary of the Effective Date,
provided ,
that this Warrant shall not be exercisable unless and until the
Common Stock to be issued upon the exercise of this Warrant are
then listed with the American Stock Exchange, as contemplated by
Section 9(j).
2.
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SECTION 3.
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EXERCISE
OF THE PURCHASE RIGHTS.
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(a)
Exercise .
The purchase rights set forth in this Warrant are exercisable by
the Warrantholder, in whole or in part, at any time, or from time
to time, during the Warrant Term, by tendering to the Company at
its principal office a notice of exercise in the form attached
hereto as
Exhibit I (the
“
Notice of Exercise ”),
duly completed and executed. Promptly upon receipt of the Notice of
Exercise and the payment of the Purchase Price in accordance with
the terms set forth below, and in no event later than three (3)
days thereafter, the Company shall issue to the Warrantholder a
certificate for the number of shares of Common Stock purchased and
shall execute the acknowledgment of exercise in the form attached
hereto as
Exhibit II (the
“
Acknowledgment of Exercise ”)
indicating the number of shares which remain subject to future
purchases, if any.
The
Purchase Price may be paid at the Warrantholder’s
election either (i) by cash or check, or (ii) by surrender of
all or a portion of the Warrant for shares of Common Stock to
be exercised under this Warrant and, if applicable, an amended
Warrant representing the remaining number of shares
purchasable hereunder, as determined below (“
Net Issuance ”).
If the Warrantholder elects the Net Issuance method, the Company
will issue Common Stock in accordance with the following
formula:
X
=
Y(A-B )
A
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Where:
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X
=
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the
number of shares of Common Stock to be issued to the
Warrantholder.
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Y
=
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the
number of shares of Common Stock requested to be exercised under
this Warrant.
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A
=
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the
fair market value of one (1) share of Common Stock at the time of
issuance of such shares.
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B
=
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the
Exercise Price.
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For
purposes of the above calculation, current fair market value
of Common Stock shall mean:
(i)
if
the Common Stock is traded on the New York Stock Exchange, the
American Stock Exchange, any exchange operated by the NASDAQ
Stock Market, Inc. or any other securities exchange, the fair
market value shall be deemed to be the product of (x) the
average of the closing prices over a five (5) day period
ending three (3) days before the day the current fair market
value of the securities is being determined and (y) the number
of shares of Common Stock subject to such exercise;
or
3.
(ii)
if
at any time the Common Stock is not listed on any securities
exchange, the current fair market value of such Common Stock
shall be the product of (x) the highest price per share which
the Company could obtain from a willing buyer (not a current
employee or director) for shares of Common Stock sold by the
Company, from authorized but unissued shares, as determined in
good faith by its Board of Directors and (y) the number of
shares of Common Stock subject to such exercise, unless the
Company shall become subject to a Merger Event, in which case
the fair market value of Common Stock shall be deemed to be
the per share value received by the holders of the
Company’s Common Stock on a common equivalent basis
pursuant to such Merger Event.
Upon
partial exercise by either cash or Net Issuance, the Company
shall promptly issue an agreement substantially in the form of
the Agreement representing the remaining number of shares
purchasable hereunder. All other terms and conditions of such
agreement shall be identical to those contained herein,
including, but not limited to the Effective Date
hereof.
(b)
Exercise Prior to Expiration .
To the extent that the Warrantholder has not exercised its purchase
rights under this Agreement to all Common Stock subject hereto, and
if the fair market value of one share of the Common Stock is
greater than the Exercise Price then in effect, this Agreement
shall be deemed automatically exercised pursuant to Section 3(a)
(even if not surrendered) immediately before the expiration of the
Warrant Term. For purposes of such automatic exercise, the fair
market value of one share of the Common Stock upon such expiration
shall be determined pursuant to Section 3(a). To the extent this
Agreement or any portion thereof is deemed automatically exercised
pursuant to this Section 3(b), the Company agrees to promptly
notify the Warrantholder of the number of shares of Common Stock if
any, the Warrantholder is to receive by reason of such automatic
exercise.
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SECTION 4.
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RESERVATION
OF SHARES.
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During
the Warrant Term, the Company will at all times have
authorized and reserved a sufficient number of shares of its
Common Stock to provide for the exercise of the rights to
purchase such stock as provided for herein.
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SECTION 5.
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NO
FRACTIONAL SHARES OR SCRIP.
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No
fractional shares or scrip representing fractional shares
shall be issued upon the exercise of this Warrant, but in lieu
of such fractional shares the Company shall make a cash
payment therefor upon the basis of the Exercise Price then in
effect.
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SECTION 6.
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NO
RIGHTS AS SHAREHOLDER/STOCKHOLDER.
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This
Warrant does not entitle the Warrantholder to any voting
rights or other rights as a stockholder of the Company prior
to the exercise of this Warrant.
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SECTION 7.
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WARRANTHOLDER
REGISTRY.
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The
Company shall maintain a registry showing the name and address
of the registered holder of this Warrant.
Warrantholder’s initial address, for purposes of such
registry, is set forth below Warrantholder’s signature
on this Warrant. Warrantholder may change such address by
giving written notice of such changed address to the
Company.
4.
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SECTION 8.
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ADJUSTMENT
RIGHTS.
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The
Exercise Price and the number of shares of Common Stock
purchasable hereunder are subject to adjustment, as
follows:
(a)
Merger Event .
If at any time prior to the exercise of this Warrant there shall be
Merger Event, then, as a part of such Merger Event, lawful
provision shall be made so that the Warrantholder shall thereafter
be entitled to receive, upon exercise of this Warrant, the number
of shares of stock or other securities or property of the successor
corporation resulting from such Merger Event that would have been
issuable if Warrantholder had exercised this Warrant immediately
prior to the Merger Event. In any such case, appropriate adjustment
(as determined in good faith by the Company’s Board of
Directors) shall be made in the application of the provisions of
this Warrant with respect to the rights and interests of the
Warrantholder after the Merger Event to the end that the provisions
of this Warrant (including adjustments of the Exercise Price and
number of shares of stock purchasable) shall be applicable in their
entirety, and to the greatest extent possible. Without limiting the
foregoing, in connection with any Merger Event, upon the closing
thereof, the Company will use reasonable efforts (as determined by
the Company in its sole discretion) to cause the successor or
surviving entity to assume the obligations of this Warrant. If the
obligations of this Warrant are not assumed in connection with the
Merger Event, the Company shall give Warrantholder written notice
at least five (5) days prior to the closing of the Merger Event of
such fact. In such event, notwithstanding any other provision of
this Agreement to the contrary, Warrantholder may immediately
exercise this Warrant in the manner specified in this Agreement
with such exercise effective immediately prior to closing of the
Merger Event. If Warrantholder elects not to exercise this Warrant,
then this Warrant will terminate immediately prior to the closing
of the Merger Event. If a Merger Event occurs at any time before
the shares of Common Stock subject to this Warrant are listed for
trading on the American Stock Exchange and the successor or
surviving entity does not agree to assume the obligations of this
Warrant, then the Warrantholder shall receive liquidated damages in
an amount equal to the difference between the Exercise Price of the
Warrant as then in effect and the consideration per share payable
to the holders of the Common Stock in the transaction pursuant to
which the Merger Event occurs.
(b)
Reclassification of Shares .
Except as set forth in Section 8(a) or Section 8(c), if the Company
at any time shall, by combination, reclassification, exchange or
subdivision of securities or otherwise, change any of the
securities as to which purchase rights under this Warrant exist
into the same or a different number of securities of any other
class or classes, this Warrant shall thereafter represent the right
to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the
securities which were subject to the purchase rights under this
Warrant immediately prior to such combination, reclassification,
exchange, subdivision or other change.
(c)
Subdivision or Combination of Shares .
If the Company at any time shall combine or subdivide its Common
Stock, (i) in the case of a subdivision, the Exercise Price shall
be proportionately decreased, and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be
proportionately increased, or (ii) in the case of a combination,
the Exercise Price shall be proportionately increased, and the
number of shares of Common Stock issuable upon the exercise of this
Warrant shall be proportionately decreased.
5.
(d)
Stock Dividends .
If the Company at any time while this Warrant is outstanding and
unexpired shall:
(i)
pay
a dividend with respect to the Common Stock payable in Common
Stock, then the Exercise Price shall be adjusted, from and
after the date of determination of stockholders entitled to
receive such dividend or distribution, to that price
determined by multiplying the Exercise 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 any other clause
of this Section 8, then, in each such case, provision shall be
made by the Company such that the Warrantholder shall receive
upon exercise or conversion of this Warrant a proportionate
share of any such distribution as though it were the holder of
the Common Stock as of the record date fixed for the
determination of the shareholders/stockholders of the Company
entitled to receive such distribution.
(e)
Antidilution Rights .
To the extent that additional antidilution rights applicable to the
stock purchasable hereunder may be set forth in the Company’s
Charter and shall be applicable with respect to the stock issuable
hereunder, the Company shall promptly provide the Warrantholder
with any restatement, amendment, modification or waiver of the
Charter;
provided ,
that no such amendment, modification or waiver shall impair or
reduce the antidilution rights applicable to the stock as of the
date hereof unless such amendment, modification or waiver affects
the rights of Warrantholder with respect to the Common Stock in the
same manner as it affects all other holders of Common Stock. The
Company shall provide Warrantholder with prior written notice of
any issuance of its stock or other equity security to occur after
the Effective Date of this Warrant, which notice shall include (a)
the price at which such stock or security is to be sold, (b) the
number of shares to be issued, and (c) such other information as
necessary for Warrantholder to determine if a dilutive event has
occurred. For the avoidance of doubt, there shall be no duplicate
anti-dilution adjustment pursuant to this subsection (e), the
forgoing subsection (d) and the Company’s
Charter.
(f)
Notice of Adjustments .
If: (i) the Company shall declare any dividend or distribution upon
its stock, whether in stock, cash, property or other securities
(assuming Warrantholder consents to a dividend involving cash,
property or other securities); (ii) the Company shall offer for
subscription pro rata to the holders of any class of its stock any
additional shares of stock of any class or other rights; (iii)
there shall be any Merger Event; (iv) the Company shall sell,
lease, license or otherwise transfer all or substantially all of
its assets; or (v) there shall be any voluntary dissolution,
liquidation or winding up of the Company; then, in connection with
each such event, the Company shall send to the Warrantholder: (A)
at least ten (10) days’ prior written notice of the date on
which the books of the Company shall close or a record shall be
taken for such dividend, distribution, subscription rights
(specifying the date on which the holders of Common Stock shall be
entitled thereto) or for determining rights to vote in respect of
such Merger Event, dissolution, liquidation or winding up; and (B)
in the case of any such Merger Event, sale, lease, license or other
transfer of all or substantially all assets, dissolution,
liquidation or winding up, at least ten (10) days’ prior
written notice of the date when the same shall take place (and
specifying the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other
property deliverable upon such Merger Event, dissolution,
liquidation or winding up).
6.
Each
such written notice shall set forth, in reasonable detail, (i)
the event requiring the notice, and (ii) if any adjustment is
required to be
