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EXHIBIT 10.41
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FORM OF WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE SECURITIES LAWS
AND NO TRANSFER OF THESE SECURITIES MAY BE MADE EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (B) PURSUANT TO AN EXEMPTION
THEREFROM WITH RESPECT TO WHICH THE COMPANY MAY, UPON REQUEST, REQUIRE A
SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM
THE REQUIREMENTS OF THE ACT.
No. W-____ DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
WARRANT CERTIFICATE
The Warrants are part of a series of 450,000 warrants issued pursuant to
that certain Purchase Agreement dated March 2, 1998 by and between the Company,
the initial holder hereof and others (the "Purchase Agreement"). This
Certificate represents ____________ Warrants for the purchase of _______________
shares of Common Stock. A copy of the Purchase Agreement may be obtained by the
Holder at no charge from the Company at the Company's address set forth in
Section 9 below.
1. Warrant; Purchase Price
Each Warrant shall entitle the Holder initially to purchase one
share of Common Stock of the Company and the purchase price payable upon
exercise of the Warrants shall initially be $5.812 per share of Common Stock
(the "Purchase Price"). The shares of Common Stock issuable upon exercise of the
Warrant are sometimes referred to herein as the "Warrant Shares."
2. Exercise; Expiration Date
2.1 The Warrants are exercisable, at the option of the
Holder, in whole or in part at any time and from time to time commencing on May
15, 1998 (the "Commencement Date") and until the Expiration Date, upon surrender
of this Warrant Certificate to the Company together with a duly completed Notice
of Exercise substantially in the form attached hereto as EXHIBIT 1 and the
Investment Letter in the form attached hereto as EXHIBIT 2 and payment of the
Purchase Price, at the election of the Holder, either (i) in cash or (ii) by
receiving from the Company the number of Warrant Shares equal to (A) the number
of Warrant Shares as to which this Warrant is being exercised, minus (ii) the
number of Warrant Shares having an aggregate Fair Market Value as of the date
the Notice of Exercise is delivered (the "Determination Date") equal to the
aggregate Purchase Price for the number of Warrant Shares as to which this
Warrant is being exercised. For purposes hereof, Fair Market Value means, as of
the Determination Date, the value of the Common Stock determined as follows: (a)
if the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Xxxxxx
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Xxxxxxxx Xxxxxx, the Fair Market Value of a share of Common Stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in the Common Stock) on the last market trading day
prior to the Determination Date, as reported in the Wall Street Journal or such
other source as the Board of Directors deems reliable; (b) if the Common Stock
is quoted on the Nasdaq System (but not on the Nasdaq National Market) or is
regularly quoted by a recognized securities dealer but selling prices are not
reported, the Fair Market Value of a share of Common Stock shall be the mean
between the bid and asked prices for the Common Stock on the last market trading
day prior to the Determination Date, as reported in the Wall Street Journal or
such other source as the Board of Directors deems reliable; or (c) in the
absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Board of Directors. In the case of
exercise of less than the entire Warrant represented by this Warrant
Certificate, the Company shall cancel the Warrant Certificate upon the surrender
thereof and shall execute and deliver a new Warrant Certificate for the balance
of such Warrant.
2.2 The term "Expiration Date" shall mean 5:00 p.m. New York
time on May 15, 2003, or if such day shall in the State of New York be a holiday
or a day on which banks are authorized to close, then 5:00 p.m. New York time
the next following day which in the State of New York is not a holiday or a day
on which banks are authorized to close.
3. Ownership
The Company may deem and treat the person in whose name this
Warrant is registered as the holder and owner hereof (notwithstanding any
notations of ownership or writing hereon made by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary until
presentation of this Warrant for registration of transfer as provided in Section
7.
4. Reservation of Shares
The Company covenants that it will at all times reserve and keep
available out of its authorized capital stock, solely for the purpose of issue
upon exercise of the Warrant such number of shares of Common Stock as shall then
be issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of capital stock which shall be issuable upon exercise of the
Warrants shall be duly and validly issued and fully paid and non-assessable and
free from all taxes, liens and charges with respect to the issue thereof, and
that upon issuance such shares shall be listed on each national securities
exchange, if any, on which the other shares of such outstanding capital stock of
the Company are then listed.
5. Adjustment of Number of Shares
Upon each adjustment of the Warrant Price as provided in Section
6, the Holder shall thereafter be entitled to purchase, at the Warrant Price
resulting from such adjustment, the number of shares (calculated to the nearest
tenth of a share) obtained by multiplying the Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
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pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Warrant Price resulting from such adjustment.
6. Adjustment of Warrant Price. The Warrant Price shall be subject
to adjustment from time to time as follows:
6.1 If, at any time during the Term of this Warrant, the
number of shares of Common Stock outstanding is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, following the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend, subdivision or
split-up, the Warrant Price shall be appropriately decreased so that the number
of shares of Common Stock issuable upon the exercise hereof shall be increased
in proportion to such increase in outstanding shares.
6.2 If, at any time during the Term of this Warrant, the
number of shares of Common Stock outstanding is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date for such
combination, the Warrant Price shall appropriately increase so that the number
of shares of Common Stock issuable upon the exercise hereof shall be decreased
in proportion to such decrease in outstanding shares.
6.3 In case, at any time during the Term of this Warrant,
the Company shall declare a cash dividend upon its Common Stock payable
otherwise than out of earnings or earned surplus or shall distribute to holders
of its Common Stock shares of its capital stock (other than Common Stock), stock
or other securities of other persons, evidences of indebtedness issued by the
Company or other persons, assets (excluding cash dividends and distributions) or
options or rights (excluding options to purchase and rights to subscribe for
Common Stock or other securities of the Company convertible into or exchangeable
for Common Stock), then, in each such case, immediately following the record
date fixed for the determination of the holders of Common Stock entitled to
receive such dividend or distribution, the Warrant Price in effect thereafter
shall be determined by multiplying the Warrant Price in effect immediately prior
to such record date by a fraction of which the numerator shall be an amount
equal to the difference of (x) the Current Market Price of one share of Common
Stock minus (y) the fair market value (as determined by the Board of Directors
of the Company, whose determination shall be conclusive) of the stock,
securities, evidences of indebtedness, assets, options or rights so distributed
in respect of one share of Common Stock, and of which the denominator shall be
such Current Market Price.
6.4 All calculations under this Section 6 shall be made to
the nearest cent or to the nearest one-tenth (1/10) of a share, as the case may
be.
6.5 For the purpose of any computation pursuant to this
Section 6, the Current Market Price at any date of one share of Common Stock
shall be deemed to be (a) if the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market, the Current Market Price of a share of Common Stock shall be
the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of
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trading in the Common Stock) on the last market trading day prior to such date,
as reported in the Wall Street Journal or such other source as the Board of
Directors deems reliable; (b) if the Common Stock is quoted on the Nasdaq System
(but not on the Nasdaq National Market) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Current Market Price
of a share of Common Stock shall be the mean between the bid and asked prices
for the Common Stock on the last market trading day prior to such date, as
reported in the Wall Street Journal or such other source as the Board of
Directors deems reliable; or (c) in the absence of an established market for the
Common Stock, the Current Market Price shall be determined in good faith by the
Board of Directors.
6.6 Whenever the Warrant Price shall be adjusted as provided
in Section 6.5, the Company shall prepare a statement showing the facts
requiring such adjustment and the Warrant Price that shall be in effect after
such adjustment. The Company shall cause a copy of such statement to be sent by
mail, first class postage prepaid, to each Holder of this Warrant at its, his or
her address appearing on the Company's records. Where appropriate, such copy may
be given in advance and may be included as part of the notice required to be
mailed under the provisions of subsection 6.8 of this Section 6.
6.7 Adjustments made pursuant to shall be made on the date
such dividend, subdivision, split-up, combination or distribution, as the case
may be, is made, and shall become effective at the opening of business on the
business day next following the record date for the determination of
stockholders entitled to such dividend, subdivision, split-up, combination or
distribution.
6.8 In the event the Company shall propose to take any
action of the types described in subsections 6.1, 6.2, and 6.3 above of this
Section 6, the Company shall forward, at the same time and in the same manner,
to the Holder of this Warrant such notice, if any, which the Company shall give
to the holders of capital stock of the Company.
6.9 In any case in which the provisions of this Section 6
shall require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event issuing to the Holder of all or any part of this Warrant which is
exercised after such record date and before the occurrence of such event the
additional shares of capital stock issuable upon such exercise by reason of the
adjustment required by such event over and above the shares of capital stock
issuable upon such exercise before giving effect to such adjustment exercise;
provided, however, that the Company shall deliver to such Holder a due xxxx or
other appropriate instrument evidencing such Holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
7. Securities Law Restrictions
7.1 Restricted Securities. The Holder understands that this
Warrant and the Warrant Shares constitute "restricted securities" under the
federal securities laws inasmuch as they are, or will be, acquired from the
Company in transactions not involving a public offering and accordingly may not,
under such laws and applicable regulations, be resold or transferred without
registration under the Securities Act or an applicable exemption from such
registration.
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In this connection, the Holder acknowledges that Rule 144 of the Securities and
Exchange Commission (the "Commission") is not now, and may not in the future be,
available for resales of the Warrant and the Warrant Shares hereunder. Unless
the Warrant Shares are subsequently registered pursuant to Section 8, the Holder
further acknowledges that the securities legend on EXHIBIT 2 attached hereto
shall be placed on any Warrant Shares issued to the Holder upon exercise of this
Warrant.
7.2 Representations. By receipt of this Warrant, the Holder
makes the same representations with respect to the acquisition of this Warrant
as the Holder is required to make upon the exercise of this Warrant and
acquisition of the Warrant Shares as set forth in the Form of Investment Letter
attached as EXHIBIT 2 attached hereto.
7.3 Certification of Investment Purpose. Unless a current
registration statement under the Securities Act shall be in effect with respect
to the Warrant Shares, the Holder covenants and agrees that, at the time of
exercise hereof, it will deliver to the Company a written certification executed
by the Holder that the Warrant Shares are for the account of such Holder and
acquired for investment purposes only and that such securities are not acquired
with a view to, or for sale in connection with, any distribution thereof.
7.4 Transfer Mechanics. Subject to the provisions of
Sections 7.1 and 7.2 above, this Warrant and all rights hereunder are
transferable in whole or in part upon the books of the Company by the Holder
hereof in person or by duly authorized attorney, and a new Warrant or Warrants,
of the same tenor as this Warrant but registered in the name of the transferee
or transferees (and in the name of the Holder, if a partial transfer is
effected) shall be made and delivered by the Company upon surrender of this
Warrant duly endorsed, at the office of the Company referred to in Section 9
hereof.
7.5 Replacement. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft or destruction, and, in such
case, of indemnity or security reasonably satisfactory to it, and upon surrender
of this Warrant if mutilated, the Company will make and deliver a new Warrant of
like tenor, in lieu of this Warrant; provided that if the Holder hereof is an
instrumentality of a state or local government or an institutional holder or a
nominee for such an instrumentality or institutional holder an irrevocable
agreement of indemnity by such Holder shall be sufficient for all purposes of
this Section 7, and no evidence of loss or theft or destruction shall be
necessary. This Warrant shall be promptly canceled by the Company upon the
surrender hereof in connection with any transfer or replacement. Except as
otherwise provided above, in the case of the loss, theft or destruction of a
Warrant, the Company shall pay all expenses, taxes and other charges payable in
connection with any transfer or replacement of this Warrant, other than stock
transfer taxes (if any) payable in connection with a transfer of this Warrant,
which shall be payable by the Holder. Holder will not transfer this Warrant and
the rights hereunder except in compliance with federal and state securities
laws.
8. Registration Rights
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The holder of this Warrant has all the benefits, and by
accepting this warrant, assumes all of the obligations of a holder of Warrant
Shares under the Purchase Agreement.
9. Notices
Any notice or other document required or permitted to be given
or delivered to the Holder shall be delivered at, or sent by certified or
registered mail to, the Holder at the address of the Holder appearing on the
books of the Company or to such other address as shall have been furnished to
the Company in writing by the Holder. Any notice or other document required or
permitted to be given or delivered to the Company shall be delivered at, or sent
by certified or registered mail to, the Company at 000 X. Xxxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxxx Xxxxxxx, XX 00000, or to such other address as shall have
been furnished in writing to the Holder by the Company. Any notice so addressed
and mailed by registered or certified mail shall be deemed to be given when so
mailed. Any notice so addressed and otherwise delivered shall be deemed to be
given when actually received by the addressee.
10. Amendment
This Warrant may be amended as set forth in Section 8 of the
Purchase Agreement dated as of March 2, 1998.
11. Governing Law
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed by its officers thereunto duly authorized and its corporate
seal to be affixed hereon, as of this ____ day of __________, 1998.
DENTAL/MEDICAL DIAGNOSTIC
SYSTEMS, INC.
By: ________________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman, CEO, President
and Secretary
[SEAL]
Attest:
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial Officer
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EXHIBIT 1 TO WARRANT
NOTICE OF EXERCISE
The undersigned hereby irrevocably elects to exercise, pursuant
to Section 32 of the Warrant Certificate accompanying this Notice of Exercise,
_____________Warrants of the total number of Warrants owned by the undersigned
pursuant to the accompanying Warrant Certificate, and herewith makes payment of
the Purchase Price of such shares in full either in cash or by tendering
Warrants with a Fair Market Value equal to all or any part of the Purchase Price
with respect to the Warrants for which this notice is given, in accordance with
the terms of Section 2.1 of the Warrant Certificate.
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Name of Holder
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Signature
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Address:
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CASH
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Warrants Tendered - FMV
= $_______________________
divided by $5.812 (as adjusted)
= ________________________ Warrant Shares
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EXHIBIT 2 TO WARRANT
To: DENTAL/MEDICAL DIAGNOSTIC SYSTEMS, INC.
In connection with the purchase by the undersigned of
___________ shares of the Common Stock (the "Warrant Shares") of Dental/Medical
Diagnostic Systems, Inc, a Delaware corporation (the "Company"), upon exercise
of that certain Common Stock Warrant dated as of March __, 1998 the undersigned
hereby represents and warrants as follows:
The Warrant Shares to be received by the undersigned upon
exercise of the Warrant are being acquired for its own account, not as a nominee
or agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Warrant Shares. The undersigned believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Warrant Shares.
The undersigned understands that the Warrant Shares are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, the undersigned represents that it is familiar with Commission Rule
144, as presently in effect, and understands the resale limitations imposed
thereby and by the Act.
Without in any way limiting the representations set forth above,
the undersigned agrees not to make any disposition of all or any portion of the
Warrant Shares unless and until:
There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in accordance
with such registration statement; or
(i) The undersigned shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
requested, the undersigned shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company that such disposition will not
require registration of such shares under the Act. The Company will not require
an opinion of counsel for sales made pursuant to Rule 144 except in unusual
circumstances.
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The undersigned understands the instruments evidencing the
Warrant Shares may bear the following legend:
THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH SALE OR TRANSFER IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
Dated: ____________, 1998
______________________________________
Name:_________________________________
Title:________________________________
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