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EXHIBIT 4.5
MEDICAL SCIENCE SYSTEMS, INC.
WARRANT AGREEMENT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS AN EXEMPTION THEREFROM
IS AVAILABLE.
This Warrant (the "Warrant") is entered into by and between Medical
Science Systems, Inc., a Texas corporation (the "Company"), and
_________________ ("Holder") as of the 19th day of August, 1997.
RECITALS
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WHEREAS, the Company has issued and sold to Holder a subordinated
promissory note in the principal amount of $____________ (the "Note");
WHEREAS, in consideration for the loan to the Company pursuant to the
Note, the Company desires to grant to Holder warrants (the "Warrants") to
purchase 10,000 shares of Common Stock for each $50,000 principal amount of the
Note; and
WHEREAS, the Company desires to evidence such Warrants by executing and
delivering this Warrant Agreement (the "Agreement").
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the adequacy and receipt of which are irrevocably
acknowledged, the parties hereto agree as follow.
1. DESCRIPTION; EXECUTION: REGISTRATION.
(a) This certifies that, for value received, the Holder is hereby
granted warrants to purchase _________ shares of the Company's common stock,
(the "Common Stock") at the exercise price and on the terms set forth below. The
Company shall cause to be issued to the Holder a certificate in the form
attached hereto, as soon as practicable after the execution of the Agreement
(the "Warrant Certificate").
(b) This Agreement shall be executed on behalf of the Company by its
President. Upon delivery of this Warrant to the Holder, this Agreement shall be
binding upon the Company, and the Holder shall be entitled to all the benefits
set forth herein.
2. TERM OF WARRANTS.
(a) This Warrant shall remain exercisable as provided in Section 3
until the close of business on the earlier of (i) the date five (5) years from
the date first written above or (ii) the Call Date, as defined in paragraph (b)
below (the "Expiration Date").
(b) Upon the occurrence of the shares of the Company's Common Stock
being traded on any national or regional stock exchange or on the automated
quotation system of the National Association of Securities Dealers, Inc.
("NASDAQ") and the closing price of the Common Stock equals or exceeds $12.00
per share for a period of thirty (30) consecutive trading days, then the Company
may, at the option of the Board of Directors, establish a date on or before
which all of the Warrants must be exercised (the "Call Date"). Notwithstanding
anything herein to the contrary, any Warrants which are not exercised in the
manner provided in Section 3 on or before the Call Date shall automatically and
without further action by the Company expire and terminate. The Company shall
give each holder of Warrant written notice of the Call Date at least sixty (60)
days in advance.
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3. EXERCISE OF WARRANT.
(a) The Warrant shall be immediately exercisable. At any time until the
Expiration Date, the Holder shall have the right to purchase from the Company
(and the Company shall promptly issue to the Holder) up to __________ shares of
Common Stock at the Exercise Price (as defined below) by surrendering the
appropriate Warrant Certificate and the Subscription Form attached hereto to the
Company at its executive offices and paying the aggregate Exercise Price for the
shares of Common Stock to be purchased, in cash or by check or by the delivery
of the shares of Common Stock having a current fair market value equal to the
exercise price, which shares may be the shares underlying the warrants.
(b) The Warrants may be exercised in whole and in part, but not in
increments of less than 100 shares. In case of a partial exercise, the Warrant
Certificate shall be surrendered and a new Warrant Certificate of the same tenor
and for the purchase of the number of shares not purchased upon such partial
exercise shall be issued by the Company to the Holder hereof. Warrants shall be
deemed to have been exercised immediately prior to the close of business on the
date of their surrender for exercise as provided above, and the person or entity
entitled to receive the shares of Common Stock issuable upon the exercise shall
be treated for all purposes as the holder of such shares of record as of the
close of business on such date. Prior to any such exercise, neither the Holder
nor any person entitled to receive shares of Common Stock issuable upon exercise
shall be or have any of the rights of a shareholder of the Company. No
adjustment shall be made for dividends or other shareholder rights for which the
record date is prior to the date of exercise. As soon as practicable on or after
such date, the Company shall issue in the name of, and deliver to the person or
persons entitled to receive, a certificate or certificates for the full number
of shares of Common Stock issuable upon such exercise.
4. EXERCISE PRICE; ADJUSTMENT.
4.1 Exercise Price. The initial Exercise Price for each Share issuable
pursuant to the Warrants shall be Five Dollars and Fifty Cents ($5.50), adjusted
as provided below.
5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and kind of
securities purchasable upon the exercise of the Warrants and the Exercise Price
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
5.1 Adjustments. The number of shares of Common Stock purchasable upon
the exercise of each Warrant and the Exercise Price thereof shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock, (iii) combine its shares of Common
Stock, or (iv) issue, by reclassification of its shares of Common Stock, other
securities of the Company, the number of shares of Common Stock purchasable upon
exercise of the Warrant immediately prior thereto shall be adjusted so that the
holder of the Warrant shall be entitled to receive the kind and number of shares
of Common Stock or other securities of the Company which such holder would have
owned or would have been entitled to receive immediately after the happening of
any of the events described above, had the Warrant been exercised immediately
prior to the happening of such event or any record date with respect thereto.
Any adjustment made pursuant to this Subsection 5.1(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
(b) In case the Company shall distribute to all or
substantially all holders of its shares of Common Stock, evidences of its
indebtedness or assets (excluding cash dividends or distributions out of
earnings) or rights, options, warrants or convertible securities containing the
right to subscribe for or purchase shares of Common Stock, then in each case the
number of shares of Common Stock thereafter
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purchasable upon the exercise of the Warrant shall be determined by multiplying
the number of shares of Common Stock theretofore purchasable upon exercise of
such Warrant by a fraction, of which the numerator shall be the then Current
Market Price (as defined in Section 7.1) on the date of such distribution, and
of which the denominator shall be such Current Market Price on such date minus
the then fair value (determined by the Company's Board of Directors) of the
portion of the assets or evidences of indebtedness so distributed or of such
subscription rights, options, warrants or convertible securities applicable to
one Unit. Such adjustment shall be made whenever any such distribution is made
and shall become effective on the date of distribution retroactive to the record
date for the determination of shareholders entitled to receive such
distribution.
(c) No adjustment in the number of shares of Common Stock
purchasable pursuant to the Warrants shall be required unless such adjustment
would require an increase or decrease of at least one percent in the number of
shares of Common Stock then purchasable upon the exercise of the Warrant or, if
the Warrant is not then exercisable, the number of shares of Common Stock
purchasable upon the exercise of the Warrants on the first date thereafter that
the Warrant become exercisable; provided, however, that any adjustments which by
reason of this Subsection 5.1(c) are not required to be made immediately shall
be carried forward and taken into account in any subsequent adjustment.
(d) Whenever the number of shares of Common Stock purchasable
upon the exercise of a Warrant is adjusted as herein provided, the Exercise
Price payable upon exercise of the Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of shares of Common Stock purchasable upon the
exercise of such Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of shares of Common Stock so purchasable
immediately thereafter.
(e) Whenever the number of shares of Common Stock purchasable
upon the exercise of a Warrant or the Exercise Price is adjusted as herein
provided, the Company shall cause to be promptly mailed to the Holder by first
class mail, postage prepaid, notice of such adjustment or adjustments.
(f) For the purpose of this Section 5, the term "shares of
Common Stock" shall mean (i) the class of shares of Common Stock designated as
Common Stock of the Company at the date of this Agreement, or (ii) any other
class of stock resulting from successive changes or reclassification of such
shares of Common Stock consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value.
5.2 No Adjustment for Dividends. Except as provided in Section 5.1
hereof, no adjustment in respect of any dividends or distributions out of
earnings shall be made during the term of a Warrant or upon the exercise of a
Warrant.
5.3 No Adjustment in Certain Cases. No adjustments shall be made
pursuant to Section 5 hereof in connection with the grant or exercise of
presently authorized or outstanding options to purchase shares of Common Stock
under the Company's existing stock option plan or the exercise of presently
outstanding warrants to purchase shares of Common Stock.
5.4 Preservation of Purchase Rights upon Reclassification,
Consolidation, etc. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Holder an
agreement that the Holder shall have the right thereafter, upon payment of the
Exercise Price in effect immediately prior to such action, to purchase, upon
exercise of each Warrant, the kind and amount of shares of Common Stock and
other securities and property which it would have owned or have been entitled to
receive after the happening of such consolidation, merger, sale or
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conveyance had each Warrant been exercised immediately prior to such action. In
the event of a merger described in Section 368(a)(2)(E) of the Internal Revenue
Code of 1986, as amended, in which the Company is the surviving corporation, the
right to purchase shares of Common Stock under the Warrant shall terminate on
the date of such merger and thereupon the Warrant shall become null and void,
but only if the controlling corporation shall agree to substitute for the
Warrant its warrant which entitle the holders thereof to purchase upon their
exercise the kind and amount of shares of Common Stock and other securities and
property which they would have owned or been entitled to receive had the Warrant
been exercised immediately prior to such merger. Any such agreements referred to
in this Subsection 5.4 shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Section 5
hereof. The provisions of this Subsection 5.4 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
6. REGISTRATION RIGHTS The shares of Common Stock that Holder will hold upon
exercise of the Warrant(s) (the "Registrable Securities"), will be subject to
the following registration rights:
(a) Demand Registration On Form S-3. After its initial public offering,
the Company shall use its best efforts to qualify for registration on Form S-3
or any comparable successor form. After the Company has qualified for the use of
Form S-3, Holders of Registrable Securities shall have the right to demand one
(1) registration on Form S-3 (such demand shall be in writing and shall state
the number of shares of Registrable Securities to be disposed of and the
intended methods of disposition of such shares by such Holder or Holders),
provided however, that the Company shall be obligated to effect registration
only if the Holders of at least fifty percent (50%) of the then outstanding
Registrable Securities have joined in the demand.
(b) Notification of Demand. The Company shall, upon receipt of demand
brought by Holders of at least fifty percent (50%) of the then outstanding
Registrable Securities, notify the other Holders of Registrable Securities who
are not listed in the demand. Said Holders shall have twenty (20) calendar days
in which to respond to the Company and indicate whether or not they choose to
join in the demand. Holders not so responding shall be deemed to have elected
not to join in the demand.
(c) Restriction on Sales. Notwithstanding anything herein to the
contrary, each of the holders of Registrable Securities hereby agrees, upon the
request of any regulatory agency having jurisdiction over the Company, not to
sell, transfer or otherwise dispose of the Registrable Securities for a period
of one year after the initial public offering. Each holder shall execute and
deliver to the Company any agreements, documents or instruments as may be
required by the Company or any governmental agency to evidence such one year
restriction on sales, transfers and dispositions.
7. FRACTIONAL SHARES OF COMMON STOCK; ISSUANCE OF SHARES OF COMMON STOCK;
LEGENDS.
7.1 Fractional Shares of Common Stock. The Company shall not be
required to issue fractional shares of Common Stock on the exercise of the
Warrant. If any fraction of a Unit would, except for the provisions of this
Section 7.1, be issuable on the exercise of a Warrant (or specified portion
thereof), the Company shall in lieu thereof pay an amount in cash equal to the
then Current Market Price, multiplied by such fraction. For purposes of this
Agreement, the term "Current Market Price" shall mean (i) if the shares of
Common Stock are traded in the over-the-counter market and not in the NASDAQ
National Market System nor on any national securities exchange, the average of
the per Unit closing bid price of the shares of Common Stock on the thirty (30)
consecutive trading days immediately preceding the date in question, as reported
by NASDAQ or an equivalent generally accepted reporting service, or (ii) if the
shares of Common Stock are traded in the NASDAQ National Market System or on a
national securities exchange, the average for the thirty (30) consecutive
trading days immediately preceding the date in question of the daily per Unit
closing prices of the shares of Common Stock in the NASDAQ National Market
System or on the principal stock exchange on which it is listed, as the case may
be. For purposes of clause (i) above, if trading in the shares of Common Stock
is not reported by NASDAQ, the bid price referred to in said clause
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shall be the lowest bid price as reported in the "pink sheets" published by
National Quotation Bureau, Incorporated. The closing price referred to in clause
(ii) above shall be the last reported sale price or, in the case no such
reported sale takes place on such day, the average of the reported closing bid
and asked prices, in either case in the NASDAQ National Market System or on the
national securities exchange on which the shares of Common Stock are then
listed.
7.2 Issuance of Shares of Common Stock. All shares of Common Stock
issued upon exercise of the Warrant will be duly authorized, validly issued,
fully paid and nonassessable.
7.3 Legends. If the shares of Common Stock to be issued upon exercise
of this Warrant have not been registered under the Securities Act of 1933, as
amended, then the certificates representing such shares of Common Stock shall
bear a legend substantially in the following form:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR
APPLICABLE STATE SECURITIES LAWS AND ARE RESTRICTED SECURITIES. SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT AND STATE
SECURITIES LAWS.
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8. TRANSFERABILITY.
The Warrant may not be transferred, sold or otherwise disposed of,
except by will or devise and by the laws of descent. Any attempt to transfer,
sell or otherwise dispose of this Warrant (except as provided above) shall be
void and shall not convey any rights or privileges to the transferee.
9. MISCELLANEOUS.
9.1 Notices.
All notices, requests, demands and other communications required or
permitted to be given hereunder shall be deemed to have been duly given if in
writing and delivered personally, given by prepaid telegram, or mailed first
class, postage prepaid, registered or certified mail, return receipt requested,
to the following addresses:
If to the Company: Medical Science Systems, Inc.
0000 XxxXxxxxx Xxxx.,
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxx
With a copy to: Jeffers, Wilson, Xxxxx & Xxxx, LLP
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxx, Esq.
If to the Holder:
Any party may change the address to which such communications are to be directed
to it by giving written notice to the other party. Except as otherwise provided
in this Warrant, all notices shall be deemed to be given when delivered in
person, or if placed in the mail as aforesaid, then two (2) days thereafter.
9.2 Modifications.
The parties may, by mutual consent, amend, modify, supplement and waive
any right under this Warrant in any manner agreed by them in writing at any
time.
9.3 Entire Agreement.
This Agreement and any documents, instruments or agreements
specifically referred to herein, set forth the entire agreement and
understanding of the parties with respect to the transactions contemplated
hereby and supersede all prior agreements, arrangements and understandings
relating to the subject matter hereof.
9.4 Headings.
The section and paragraph headings contained in this Warrant are for
convenient reference only, and shall not in any way affect the meaning or
interpretation hereof.
9.5 Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of California, without any regard to the choice of law
provisions thereof.
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9.6 Severability.
If any provision of this Agreement shall be held to be invalid, illegal
or unenforceable, it shall be deemed severable from the remaining provisions of
this Agreement which shall remain in full force and effect.
9.7 Waiver.
No waiver of any provision of this Agreement or any breach thereof
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar) or any other breach hereunder nor shall such waiver
constitute a continuing waiver. Either party may waive performance of any
provision of this Agreement, the non-performance of which would otherwise
constitute a breach of this Agreement, including but not limited to the
non-performance of any condition precedent to such party's performance, without
affecting the enforceability of this Agreement or the provisions contained
herein.
9.8 Successors and Assigns.
The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties
hereto. The Company may not assign this Agreement without the prior written
consent of the Holder. Holders may transfer and assign the Warrant only as
provided in Section 8. Any assignment by either party in violation of the
foregoing shall be void.
9.9 Attorneys' Fees.
If any legal action is instituted to enforce or interpret the terms of
this Warrant, the prevailing party in such action shall be entitled to actual
attorneys' fees in addition to any other relief to which the party is entitled.
IN WITNESS WHEREOF, the parties have executed this instrument as of the
date first written above.
MEDICAL SCIENCE SYSTEMS, INC.
A TEXAS CORPORATION
By:
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Xxxx X. Xxxxx, President
HOLDER
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Signature
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Printed Name
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WARRANT
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned Holder of this Warrant hereby irrevocably exercises
this Warrant for the purchase of that number of shares of Common Stock of
MEDICAL SCIENCE SYSTEMS, INC. set forth below, up to a maximum of ______________
shares of Common Stock (or such other number of shares of Common Stock as may be
issuable upon the exercise of this Warrant pursuant to the adjustment provisions
hereof), and hereby makes payment of the aggregate Exercise Price therefor which
is also set forth below, all on the terms and subject to the conditions
specified in this Warrant.
Number of Shares of Common Stock:
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x $5.50
Aggregate Purchase
Price paid: $
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Dated:
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HOLDER:
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(Signature)
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(Please print)
ACCEPTED:
MEDICAL SCIENCE SYSTEMS, INC.
a Texas corporation
By:
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Title:
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