EXHIBIT 4
---------
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") OR WITH ANY SECURITIES COMMISSION UNDER APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING THIS WARRANT OR THE
ISSUER RECEIVES AN OPINION OF COUNSEL STATING THAT SUCH SALE OR TRANSFER IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT.
No. W-7
Warrant to Purchase 217,885
Shares of Common Stock
(subject to adjustment)
CARDIAC SCIENCE, INC.
WARRANT TO PURCHASE 217,885 SHARES
OF COMMON STOCK
Cardiac Science, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for good and valuable consideration, Perseus
Acquisition/Recapitalization Fund, L.L.C. or its registered transferees,
successors or assigns (each, a "holder"), is the registered holder of warrants
(the "Warrants") to subscribe for and purchase from the Company, TWO HUNDRED
SEVENTEEN THOUSAND EIGHT HUNDRED EIGHTY-FIVE (217,885) shares of validly issued,
fully paid and nonassessable Common Stock (as adjusted pursuant to Section 4
hereof, the "Warrant Shares") of the Company, at a purchase price per share
equal to three dollars ninety-five cents ($3.95) (such price, as adjusted
pursuant to Section 4 hereof, the "Warrant Price"), subject to the provisions
and upon the terms and conditions hereinafter set forth. As used herein, (a) the
term "Common Stock" shall mean the Company's presently authorized Common Stock,
par value $.001 per share, and any stock into or for which such Common Stock may
hereafter be converted or exchanged, and (b) the term "Date of Grant" shall mean
May 30, 2002. The term "Warrant" shall include any warrant issued upon transfer
or partial exercise of this Warrant, unless the context clearly requires
otherwise. This Warrant is being issued pursuant to that certain Senior Note and
Warrant Purchase Agreement (the "Purchase Agreement") dated May 29, 2002 by and
among the Company and the Purchasers named therein. Capitalized terms used in
this letter and not defined herein shall have the meanings ascribed to them in
the Purchase Agreement.
1. Term. The purchase 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 through and including the close
2
of business on the seventh anniversary of the Date of Grant (the "Expiration
Date"); provided, however, that if the holder has timely surrendered this
Warrant for exercise in compliance with Section 2(a), but the statutory waiting
period required under HSR (as defined in Section 10(c)(ii)), and any extension
thereof, shall not have expired or been terminated BEFORE CERTAIN SHARES OF
COMMON STOCK may be issued upon the exercise of this Warrant prior to the
Expiration Date, then the Expiration Date with respect to the purchase right
represented by this Warrant with respect to such shares shall be automatically
extended until the third Business Day following the date of such expiration or
termination.
2. Exercise.
(a) Method of Exercise; Payment; Issuance of New Warrant.
Subject to Section 1 hereof, the expiration or termination of the statutory
waiting period required under HSR (and any extension thereof) in respect of the
issuance of certain Warrant Shares as provided in Section 10(c)(ii) hereof, and
the expiration of the exercise delay periods, if applicable, set forth in
Section 2(d) hereof, the purchase right represented by this Warrant may be
exercised by the holder hereof, in whole or in part, at any time or from time to
time, from and after the Date of Grant by the surrender of this Warrant (with
the notice of exercise form attached hereto as Exhibit A duly executed) at the
principal office of the Company, and, except as otherwise provided for herein,
by the payment to the Company an amount in cash or by check equal to the then
applicable Warrant Price multiplied by the number of Warrant Shares then being
purchased. In addition and not in limitation of the foregoing, if such holder
owns Senior Notes of the Company, in lieu of paying such Warrant Price in cash
or by check, such holder shall have the right (but not the obligation) to pay
such Warrant Price by agreeing to cancel and forgive the debt owed by the
Company to such holder pursuant to the Senior Notes in the amount equal to such
Warrant Price. (Such debt cancellation and forgiveness shall be applied first,
toward accrued and unpaid interest on the Senior Notes (if any), second, to any
premium due and owing on the Senior Notes (if any), and third, to the
outstanding principal amount of the Senior Notes.) 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 if exercised prior to the close of
business on such date; otherwise, the date of record shall be the next Business
Day. In the event of any exercise of the rights represented by this Warrant,
certificates for the shares of Common Stock so purchased shall be delivered to
the holder hereof as soon as possible and in any event within five (5) Business
Days after such exercise and, unless this Warrant has been fully exercised
(including without limitation, exercise pursuant to Section 2(b) below), a new
Warrant representing the portion of the Warrant 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 possible and in any event within such five (5)
Business Day period.
(b) Exercise at the Company's Option. If, at any time
following the third anniversary of the Date of Grant, (i) the daily Closing
Price (as defined below) per share of Common Stock for forty-five (45)
consecutive Trading Days (as defined below) (the close of business on such day
being referred to herein as the "Requisite Trading Date") occurring at least
forty-five (45) consecutive Trading Days following the third anniversary of the
Date of Grant, is
3
at least $6.00 (with appropriate adjustment made for any stock dividend,
split-up or subdivision or any combination or reclassification made or effected
subsequent to the date hereof), and (ii) the Shelf Registration (as defined in
the Registration Rights Agreement of even date herewith between the Company and
the Purchaser) with respect to the Warrant Shares is effective, then the
Company, at its option, may require the holder of this Warrant to exercise this
Warrant by providing written notification (the "Notice") to the holder. Such
Notice shall (i) state that the Requisite Trading Date has occurred, and that
the Company's desire to require the holder to exercise the Warrant. and (ii) be
given to the holder not later than 30 days following the Requisite Trading Date.
If the holder fails to exercise this Warrant by the first Business Day that
occurs 30 days after such holder received the Notice (which shall have been
given properly in accordance with this paragraph), this Warrant shall be deemed
to have been exercised automatically immediately prior to the close of business
on such day (the "Automatic Exercise Date"), and the person entitled to receive
the shares of Common Stock issuable upon such exercise shall be treated for all
purposes as the holder of record of such Warrant Shares as of the close of
business on such Automatic Exercise Date. As soon as practicable after the
Automatic Exercise Date, not to exceed five Business Days, the Company shall
provide written notification to the holder of the Automatic Exercise Date. This
Warrant shall be deemed to be surrendered to the Company on the Automatic
Exercise Date by virtue of this Section 2(b) and without any action by the
holder of this Warrant or any other person, and payment to the Company of the
then applicable Warrant Price multiplied by the number of Warrant Shares then
being purchased shall be deemed to have been elected to be made by the holder
pursuant to the terms of Section 2(c) below (without payment by the holder of
any exercise price or any cash, cancellation of indebtedness under the Senior
Notes or other consideration) (such election, a "Deemed Election"), unless the
holder notifies the Company in writing as soon as practicable after receipt of
the Notice, not to exceed five (5) Business Days, that, in its sole and absolute
discretion, it chooses to pay the exercise price in cash, by check or by
cancelling indebtedness under the Senior Notes pursuant to Section 2(a) above).
As promptly as practicable on or after the Automatic Exercise Date (but subject
to the expiration of the exercise delay periods, if applicable, set forth in
Section 2(d) hereof) and in any event, within five (5) Business Days after the
Automatic Exercise Date (or, if applicable, the expiration of the exercise delay
periods set forth in Section 2(d) hereof), the Company at its expense shall
issue and deliver to the person or persons entitled to receive the same a
certificate or certificates for the number of Warrant Shares issuable upon such
exercise. For purposes of the foregoing, "Closing Price" means, with respect to
a share of Common Stock, as of the date of determination, (a) the closing price
per share of Common Stock on such date published in The Wall Street Journal or,
if no such closing price on such date is published in The Wall Street Journal,
the average of the closing bid and asked prices on such date, as officially
reported on the principal national securities exchange (including, without
limitation, The Nasdaq Stock Market, Inc. (or its successor) ("NASDAQ")) on
which the Common Stock is then listed or admitted to trading; or (b) if the
Common Stock are not then listed or admitted to trading on any national
securities exchange but are designated as national market system securities by
the NASD, the last trading price per share of Common Stock on such date; or (c)
if there shall have been no trading on such date or if the Common Stock is not
so designated, the average of the reported closing bid and asked prices of the
Common Stock on such date as shown by NASDAQ and reported by any member firm of
The New York Stock Exchange, Inc. selected by the Company. If trading is
conducted on a continuous basis on any exchange, then the closing price shall be
at 4:00 p.m. New York City time. For purposes of the
4
foregoing, "Trading Day" means, so long as the Common Stock is listed or
admitted to trading on a national securities exchange, a day on which the
principal national securities exchange on which the Common Stock is listed is
open for the transaction of business, or, if the Common Stock is not so listed
or admitted for trading on any national securities exchange, a day on which
NASDAQ is open for the transaction of business.
(c) Net Issue Exercise. In lieu of the payment of the
aggregate Warrant Price, the holder shall have the right (but not the
obligation), to require the Company to convert this Warrant, in whole or in
part, into shares of Common Stock as provided for in this Section 2(c). In
connection with the foregoing and without limiting the rights of the holder
under the terms of this Warrant, the holder may elect to receive shares equal to
the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
(with the notice of exercise form and notice of such election attached hereto as
Exhibit A duly executed) in which event the Company shall issue to the holder a
number of Warrant Shares computed using the following formula:
X = Y (A - B)
----------
A
Where:
X = the number of shares of Common Stock to be issued to
the holder
Y = the number of shares of Common Stock purchasable
under the Warrant or, if only a portion of the
Warrant is being exercised, the number of shares of
Common Stock to be issued upon such partial
exercise(at the date of such calculation)
A = the Fair Market Value (as defined in Section 4(j)
below) of one (1) share of Common Stock
B = the Warrant Price
(d) Certain Limitations on Net Issue Exercise.
Notwithstanding anything to the contrary set forth herein (but giving full
effect to the provisions relating to a Deemed Election as set forth in this
Section 2(d)), and provided that a Shelf Registration (as defined in the
Registration Agreement) with respect to the offer and sale of all of the Warrant
Shares is and remains effective, the right of the holder of this Warrant to
elect to pay the Warrant Price pursuant to the terms of Section 2(c) hereof
shall be restricted as follows:
(i) the right of the holder of this Warrant to
elect to pay the Warrant Price pursuant to the terms of Section 2(c) hereof
shall not be available during the period commencing on the Date of Grant and
ending on (and excluding) the date of the first anniversary of the Date of
Grant;
(ii) if during the period commencing on (and
including) the first anniversary of the Date of Grant and ending on (and
excluding) the date of the third anniversary of the Date of Grant, the holder
elects (or, in the case of a Deemed Election, is deemed to have
5
elected pursuant to Section 2(b)) to pay the Warrant Price for all or any
portion of the Warrant Shares pursuant to the terms of Section 2(c) hereof, the
Company shall have the right to delay the exercise of such portion of the
Warrant (the potion of the Warrant that is exercisable into such Warrant Shares,
including the portion of the Warrant that would have been cancelled to pay the
Warrant Price pursuant to the terms of Section 2(c) hereof, the "Warrant
Portion") for a period of up to 10 Business Days from the receipt of notice of
exercise with respect to the Warrant Portion (or, in the case of a Deemed
Election, from the Automatic Exercise Date ), but not longer (which period shall
be deemed to include the expired portion of the exercise delay period referenced
in Section 2(d)(iii) hereof); provided that, during such 10-Business Day period,
the Company uses its reasonable best efforts (at its own cost and expense) to
locate a prospective third-party purchaser for the Warrant Portion. If, prior to
the expiration of such 10-Business Day period, (1) the Company is able to locate
such third-party purchaser for the Warrant Portion, (2) such third-party
purchaser makes a legally binding offer to purchase the Warrant Portion on terms
(including price) satisfactory to the holder, and (3) such third-party purchaser
agrees to exercise the Warrant Portion immediately after purchasing it and to
pay the exercise price thereon to the Company in cash, then the holder, at the
request of the Company, shall sell the Warrant Portion to such third-party
purchaser on such terms;
(iii) if during the period commencing on (and
including) the first anniversary of the Date of Grant and ending on (and
excluding) the date of the third anniversary of the Date of Grant, the holder
owns any Senior Notes and elects (or, in the case of a Deemed Election, is
deemed to have elected pursuant to Section 2(b)) to pay the Warrant Price for
all or any portion of the Warrant Shares pursuant to the terms of Section 2(c)
hereof , the Company shall have the right to delay the exercise of the portion
of this Warrant covering such Warrant Shares for which the holder is able to pay
the Warrant Price by canceling and forgiving the debt owed by the Company to
such holder pursuant to the Senior Notes in the amount equal to such Warrant
Price as set forth in Section 2(a) (such portion of this Warrant, the "Tax
Opinion Portion") for a period of up to 10 Business Days from the receipt of
notice of exercise with respect to such Tax Opinion Portion from the holder (or,
in the case of a Deemed Election, from the Automatic Exercise Date), but not
longer (which period shall be deemed to include the expired portion of the
exercise delay period referenced in Section 2(d)(ii) hereof); provided that,
during such 10-Business Day period, the Company shall use its reasonable best
efforts to obtain, in good faith, an unqualified opinion (reasonably
satisfactory to the holder) addressed to the holder from a nationally recognized
tax counsel acceptable to the holder that the holding period (calculated with
reference to the original investment date) of the Warrant Shares received upon
the payment of the Warrant Price by canceling and forgiving the debt owed by the
Company to such holder pursuant to the Senior Notes in the amount equal to such
Warrant Price as set forth in Section 2(a) will include the period for which
such holder held the Senior Notes to be cancelled and the Warrants to be
exercised (such opinion, the "Tax Opinion"). If, prior to the expiration of such
10-day period, the Company is able to obtain a Tax Opinion, the holder shall not
have the right to pay the Warrant Price pursuant to the terms of Section 2(c)
hereof in respect of such Tax Opinion Portion until the date of the third
anniversary of the Date of Grant; and
(iv) during the period commencing on (and
including) the first anniversary of the Date of Grant and ending on (and
excluding) the date of the third anniversary of the Date of Grant, if the
Company is unable obtain the Tax Opinion pursuant to Section 2(d)(iii) above
with
6
respect to a Tax Opinion Portion elected (or, in the case of a Deemed Election,
deemed to have been elected pursuant to Section 2(b)) to be exercised by the
holder (or the Company reasonably believes that it would be unable to obtain
such Tax Opinion), then by written notice to the holder given not more than 3
Business Days following the later of: (x) receipt of notice of exercise from
such holder by the Company in respect of such Tax Opinion Portion (or, in the
case of a Deemed Election, from the Automatic Exercise Date ) or (y) if
applicable, the expiration of the exercise delay period in respect of such Tax
Opinion Portion pursuant to Section 2(d)(iii) above, the Company shall have the
right to require the holder to exercise all or any portion of such Tax Opinion
Portion by electing to pay the Warrant Price pursuant to the methods of exercise
set forth in Section 2(a) hereof (and not pursuant to the terms of Section 2(c)
hereof ) if, upon the exercise of such portion of the Warrants, the Company will
pay such holder an additional amount (the "Grossed Up Taxes") in cash which,
after reduction for all Taxes payable by such holder thereon, is equal to the
difference between the Taxes that would be due from such holders on the exercise
of the Warrants and the immediate sale of the resulting Warrant Shares at their
fair market value if taxed as ordinary income and the Taxes that would be due on
such exercise and sale if taxed at the applicable capital gains rate. (For
purposes of computing the Grossed Up Taxes, it shall be assumed that the holder
is an individual resident of New York City, taxed at the maximum marginal rate
of Federal, state, and local income taxation).
3. Stock Fully Paid; Reservation of Shares. All Warrant 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 validly
issued, fully paid and nonassessable, and free from all taxes, liens, charges,
pre-emptive rights and other encumbrances with respect to the issue thereof. The
Company shall pay all transfer taxes, if any, attributable to the issuance of
the Warrant Shares upon the exercise of this Warrant. During the period within
which the rights represented by this Warrant may be exercised, the Company will
at all times have authorized, and reserved, and free from preemptive rights, for
the purpose of the issue upon exercise of the purchase 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.
4. Adjustment of Warrant Price and Number of Shares. The number
and kind of securities 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:
(a) Adjustments for Dividends in Stock. If the Company at
any time or from time to time while this Warrant, or any portion thereof,
remains outstanding and unexpired declares any dividend, or authorizes any other
distribution, upon any stock of the Company of any class, payable in Additional
Shares of Common Stock (as defined in this Section 4(a)) (except for any
distribution specifically provided for in Section 4(b), Section 4(c), or as set
forth in Section 4(f)), then, and in each such case, (A) the aggregate number of
Warrant Shares for which this Warrant is exercisable (the "Warrant Share
Number") immediately prior to such event shall be adjusted (and any other
appropriate actions shall be taken by the Company) so that the holder shall be
entitled to receive upon exercise of this Warrant the number of shares of Common
Stock of the Company that it would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had this Warrant
been exercised immediately prior to the occurrence of such event and (B) the
Warrant Price payable upon the exercise of this Warrant shall be adjusted
pursuant to the following formula:
7
X = Y(A)
----
B
Where:
X = the Warrant Price, as adjusted pursuant to this
formula
Y = the Warrant Price in effect immediately prior to
such adjustment
A = the number of Warrant Shares issuable upon the
exercise of this Warrant immediately prior to such
adjustment
B = the number of Warrant Shares issuable upon the
exercise of this Warrant immediately after such
adjustment
An adjustment made pursuant to this Section 4(a) shall become
effective retroactively to a date immediately following the close of business on
the record date for the determination of holders of shares of Common Stock
entitled to receive such dividend or distribution. The term "Additional Shares
of Common Stock" as used in this Warrant shall mean all shares of Capital Stock
issued or issuable by the Company after the date of this Warrant, except for the
Warrant Shares. For purposes of the foregoing, "Capital Stock" means, with
respect to any Person, any and all shares, interests, participations, rights in,
or other equivalents (however designated and whether voting or non-voting) of
such Person's capital stock and any and all rights, warrants or options
exchangeable for or convertible into such capital stock.
(b) Subdivision or Combination of Shares. If the Company
at any time or from time to time while this Warrant, or any portion thereof,
remains outstanding and unexpired shall (x) subdivide the outstanding shares of
Common Stock into a larger number of shares, (y) combine the outstanding shares
of Common Stock into a smaller number of shares or (z) issue any shares of its
Capital Stock in a reclassification of the Common Stock (other than any such
event for which an adjustment is made pursuant to another clause of this Section
4), then, and in each such case, (A) the Warrant Share Number immediately prior
to such event shall be adjusted (and any other appropriate actions shall be
taken by the Company) so that the holder shall be entitled to receive upon
exercise of this Warrant the number of shares of Common Stock of the Company
that it would have owned or would have been entitled to receive upon or by
reason of any of the events described above, had this Warrant been exercised
immediately prior to the occurrence of such event and (B) the Warrant Price
payable upon the exercise of this Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, the numerator
of which shall be the number of Warrant Shares issuable upon the exercise of
this Warrant immediately prior to such adjustment, and the denominator of which
shall be the number of Warrant Shares issuable immediately thereafter. An
adjustment made pursuant to this Section 4(b) shall become effective
retroactively to the close of business on the day upon which such corporate
action becomes effective.
(c) Certain Distributions. If the Company at any time
while this Warrant, or any portion thereof, remains outstanding and unexpired
shall declare a dividend or otherwise make a distribution to the holders of its
Common Stock (other than dividends, distributions or issuances referred to in
Section 4(a), Section 4(b), Section 4(d), Section 4(e), or Section 4(k)) in
8
the form of: (1) cash or other property; (2) any evidence of indebtedness, any
shares of its capital stock or any other securities or property of any nature
whatsoever (including securities of a subsidiary), or (3) any warrants or other
rights to subscribe for or purchase any evidences of indebtedness, any shares of
its capital stock, or any other securities or property of any nature whatsoever
(including securities of a subsidiary), then the Warrant Price shall be reduced
by multiplying the Warrant Price in effect immediately prior to the record date
for such event by a fraction (a) the numerator of which shall be the Fair Market
Value per share of Common Stock on such record date less the amount allocated to
one share of Common Stock of any such cash so distributed and the Fair Market
Value of any evidences of indebtedness, shares of capital stock, other
securities or property, or warrants or other subscriptions or purchase rights so
distributed, and (b) the denominator of which shall be such Fair Market Value
per share of Common Stock. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not so
made, the Warrant Price shall again be adjusted to be the Warrant Price which
would then be in effect if such record date had not been fixed, but such
subsequent adjustment shall not affect the number of Warrant Shares issued upon
any exercise of this Warrant prior to the date such subsequent adjustment was
made.
(d) Merger; Sale of Assets; Reclassification. If at any
time while this Warrant, or any portion thereof, remains outstanding and
unexpired there shall be (1) a reorganization or reclassification (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein), (2) a merger or consolidation of the Company with or into
another corporation in which the Company is not the surviving entity, or a
reverse triangular merger in which the Company is the surviving entity but the
shares of the Company's capital stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash, or otherwise, or (3) a sale or transfer of the
Company's properties and assets as, or substantially as, an entirety to any
other person, then, as a part of such reorganization, reclassification, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
holder of this Warrant shall thereafter be entitled to receive upon exercise of
this Warrant, during the period specified herein and upon payment of the Warrant
Price then in effect, the number of shares of stock or other securities or
property of the successor corporation (or the Company, as applicable) resulting
from such reorganization, reclassification, merger, consolidation, sale or
transfer that a holder of the shares deliverable upon exercise of this Warrant
would have been entitled to receive in such reorganization, reclassification,
merger, consolidation, sale or transfer if this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale or transfer,
all subject to further adjustment as provided in this Section 4. The foregoing
provisions of this Section 4(d) shall similarly apply to successive
reorganizations, reclassification, mergers, consolidations, sales and transfers
and to the stock or securities of any other corporation that are at the time
receivable upon the exercise of this Warrant. If the per-share consideration
payable to the holder hereof for shares in connection with any such transaction
is in a form other than cash or marketable securities, then the value of such
consideration shall be determined in the manner set forth under Section 4(j). At
the time of such event, the successor or acquiring corporation (if other than
the Company) shall expressly assume the due and punctual performance of each and
every covenant and condition of this Warrant to be performed and observed by the
Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined in good faith by the
Board of Directors of the Company, with the consent of the holder in such
instances where the rights of the holder are adversely affected in the
reasonable opinion of the holder) in order to provide for adjustments of shares
of Common Stock for which this Warrant is exercisable. These adjustments shall
be as nearly equivalent as practicable to the adjustments provided in this
Section 4. In all events, appropriate adjustment (as determined in good faith by
the Company's Board of Directors, with the consent of the holder in such
instances where the rights of
9
the holder are adversely affected in the reasonable opinion of the holder) shall
be made in the application of the provisions of this Warrant with respect to the
rights and interests of the holder after the transaction, to the end that the
provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
In case any Additional Shares of Common Stock or evidence of
indebtedness, shares of stock or other securities which are at any time,
directly or indirectly, convertible into or exchangeable for Additional Shares
of Common Stock or any rights or options to purchase any Additional Shares of
Common Stock or convertible securities shall be issued in connection with any
merger of another corporation into the Company (with the Company surviving such
merger), the amount of consideration therefor shall be deemed to be the fair
market value of such portion of the assets of such merged corporation as the
Board of Directors of the Company shall in good faith determine to be
attributable to such Additional Shares of Common Stock, convertible securities
or rights or options, as the case may be, and the Warrant Price shall be
adjusted in accordance with this Section 4.
(e) Dissolution, Liquidation and Wind-Up. In case the
Company shall, at any time prior to the expiration of this Warrant, dissolve,
liquidate or wind up its affairs, the holder of this Warrant shall be entitled,
upon the exercise of this Warrant, to receive in lieu of the shares of Common
Stock of the Company which such holder would have been entitled to receive, the
same kind and amount of assets as would have been issued, distributed or paid to
such holder upon any such dissolution, liquidation or winding up with respect to
such shares of Common Stock of the Company, had such holder been the holder of
record of the Warrant Shares receivable upon the exercise of this Warrant on the
record date for the determination of those persons entitled to receive any such
liquidating distribution. After such dissolution, liquidation or winding up
which shall result in any cash distribution in excess of the Warrant Price
provided for by this Warrant, the holder of this Warrant may, at such holder's
option, exercise the same without making payment of the Warrant Price, and in
such case the Company shall, upon the distribution to the holder, consider that
said Warrant Price has been paid in full to it and in making settlement to the
holder, shall deduct from the amount payable to the holder of this Warrant an
amount equal to such Warrant Price.
(f) Issuances of Additional Securities.
(i) Issuances of Common Stock. If and whenever
after the Date of Grant, the Company issues or sells, or in accordance with
Sections 4(f)(ii) and (iii) below, is deemed to have issued or sold, any share
of Common Stock for a consideration per share less than (x) the Adjusted Fair
Market Value (as defined in Section 4(j) below) of the Common Stock at such time
or (y) the Warrant Price in effect immediately prior to such time (the greater
of such amounts being referred to herein as the "Adjustment Multiplier"), then
immediately upon such
10
issue or sale or deemed issue or sale, the Warrant Price shall be reduced to the
amount computed using the following formula:
X = Y * [(A*B)+C]
---------
A*D
Where:
X = the Warrant Price, as adjusted pursuant to this
formula
Y = the Warrant Price in effect immediately prior to
such issue or sale
A = the Adjustment Multiplier
B = the number of shares of Common Stock outstanding
on a fully diluted basis immediately prior to such
issue or sale
C = the consideration, if any, received by the Company
upon such issue or sale
D = the number of shares of Common Stock outstanding on
a fully diluted basis immediately after such issue or
sale
Subject to Section 4(l) hereof, upon each such adjustment of the
Warrant Price hereunder, the number of shares of Common Stock acquirable upon
the exercise of this Warrant shall be adjusted to the number of shares
determined computed using the following formula:
X = Y(A)
----
B
Where:
X = adjusted number of shares of Common Stock acquirable
upon the exercise of this Warrant
Y = the Warrant Price in effect immediately prior to
being adjusted in accordance with the formula set
forth in the immediately preceding paragraph
A = the number of shares of Common Stock acquirable upon
exercise of this Warrant immediately prior to
adjustment in accordance with this formula
B = the Warrant Price as adjusted in accordance with the
formula set forth in the immediately preceding
paragraph
Notwithstanding the foregoing, there shall be no adjustment to the
Warrant Price or the number of shares of Common Stock obtainable upon the
exercise of this Warrant with respect to the issuance or granting of options to
directors, officers or employees of the Company or the exercise thereof pursuant
to the Company's stock option plan approved by the Board of Directors of the
Company, but only to the extent that the aggregate shares of Common Stock
covered by
11
such option plan (excluding shares of Common Stock issuable upon the exercise of
options outstanding on the date hereof and listed on Schedule 4.2(b) to the
Purchase Agreement) do not exceed 1,200,000 shares (subject to adjustment to
reflect any stock split, stock dividend, reclassification, recapitalization or
other transaction having a similar effect).
(ii) Issuance of Rights or Options. For
purposes of determining the adjusted Warrant Price under Section 4(f)(i) hereof,
if the Company in any manner grants or sells any rights, warrants or options to
subscribe for or purchase Convertible Securities (as defined below) or Common
Stock (the "Options"), and the price per share for which Common Stock is
issuable upon the exercise of such Options (or upon conversion or exchange of
any stock or securities (directly or indirectly) convertible or exercisable into
or exchangeable for Common Stock (the "Convertible Securities") issuable upon
exercise of such Options) is less than the greater of (x) the Adjusted Fair
Market Value of the Common Stock determined as of the time of the granting or
sale of such Options or (y) the Warrant Price in effect immediately prior to
such time, then the total maximum number of shares of Common Stock issuable upon
the exercise of such Options (or upon conversion or exchange of the total
maximum amount of such Convertible Securities issuable upon the exercise of such
Options) shall be deemed to be outstanding and to have been issued and sold by
the Company at the time of the granting or sale of such Options for such price
per share. For purposes of this paragraph, the "price per share for which Common
Stock is issuable" shall be determined by dividing (A) the total minimum amount,
if any, received or receivable by the Company as consideration for the granting
or sale of such Options, plus the aggregate minimum amount of additional
consideration payable to the Company upon exercise of all such Options, plus in
the case of such Options which relate to Convertible Securities, the aggregate
minimum amount of additional consideration, if any, payable to the Company upon
the issuance or sale of such Convertible Securities and the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock
issuable at any time upon the exercise of such Options or upon the conversion or
exchange of all such Convertible Securities issuable at any time upon the
exercise of such Options. No further adjustment of the Warrant Price or the
number of shares of Common Stock issuable hereunder shall be made when
Convertible Securities are actually issued upon the exercise of such Options or
when Common Stock is actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(iii) Issuance of Convertible Securities. For
purposes of determining the adjusted Warrant Price under Section 4(f)(i), if the
Company in any manner issues or sells any Convertible Securities and the price
per share for which Common Stock is issuable upon conversion or exchange thereof
is less than the greater of (x) the Adjusted Fair Market Value of the Common
Stock determined as of the time of such issue or sale or (y) the Warrant Price
in effect immediately prior to such time, then the maximum number of shares of
Common Stock issuable upon conversion or exchange of such Convertible Securities
shall be deemed to be outstanding and to have been issued and sold by the
Company the time of the issuance or sale of such Convertible Securities for such
price per share. For the purposes of this paragraph, the "price per share for
which Common Stock is issuable" shall be determined by dividing (A) the total
amount received or receivable by the Company as consideration for the issue or
sale of such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the conversion or
exchange thereof, by (B)
12
the total maximum number of shares of Common Stock issuable at any time upon the
conversion or exchange of all such Convertible Securities. No further adjustment
of the Warrant Price or the number of shares of Common Stock issuable hereunder
shall be made when Common Stock is actually issued upon the conversion or
exchange of such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which
adjustments of the Warrant Price or the number of shares of Common Stock
issuable hereunder had been or are to be made pursuant to other provisions of
this Section 4(f), no further adjustment of the Warrant Price or the number of
shares of Common Stock issuable hereunder shall be made by reason of such issue
or sale.
(iv) Treatment of Expired Options and Unexercised
Convertible Securities. Upon the expiration of any Option or the termination of
any right to convert or exchange any Convertible Security without the exercise
of any such Option or right, any decrease in the Warrant Price or any increase
in the number of shares of Common Stock for which this Warrant may be exercised,
to the extent in any way affected by or computed using such expired or
terminated Options or Convertible Securities, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock actually issued (or deemed
issued in accordance with Sections 4(f)(ii) and (iii) above, which have not
expired or terminated) upon the exercise, conversion or exchange of such Options
or Convertible Securities. Notwithstanding anything to the contrary set forth in
the preceding sentence, no such adjustment to the Warrant Price or the number of
shares of Common Stock for which this Warrant may be exercised shall be made to
the extent that such adjustment would put the holder in a worse economic
position than he or it would have been in, had such Option or Convertible
Security never been issued.
(v) Other Matters. If any Common Stock, Option or
Convertible Security is issued or sold, or deemed to have been issued or sold
for cash, the consideration received therefor shall be deemed to be the amount
received by the Company therefor (net of discounts, commissions and related
expenses). In case any Option is issued in connection with the issue or sale of
other securities of the Company, together comprising one integrated transaction
in which no specific consideration is allocated to such Option by the parties
thereto, the consideration for the Option shall be the Fair Market Value
thereof. The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company, and
the disposition of any shares so owned or held shall be considered an issue or
sale of Common Stock.
(g) Consideration Other than Cash. In case the Company at
any time prior to the expiration of this Warrant shall issue or sell any shares
of Common Stock or convertible securities or other common stock equivalents for
a consideration other than cash, the amount of the consideration other than cash
payable to the Company shall be deemed to be the fair value (as determined in
accordance with Section 4(j) below) of such consideration. Whether or not the
consideration so received is cash, the amount thereof shall be determined after
deducting therefrom any expenses incurred or any underwriting commissions or
concessions or discounts paid or allowed by the Company in connection therewith.
(h) Record Date. In case at any time the Company shall
fix a record date of the holders of its Common Stock for the purpose of
entitling them (1) to receive a dividend or other distribution payable in Common
Stock or convertible securities or other common stock
13
equivalents or rights or options to purchase either thereof, or (2) to subscribe
for or purchase Common Stock or convertible securities or other common stock
equivalents or rights or options to purchase either thereof, then such record
date shall be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(i) [Intentionally Deleted.]
(j) Maximum Warrant Price; Fair Market Value. The Warrant
Price in effect at any time shall not be increased as a result of any event
described in this Section 4, unless specifically indicated. Fair Market Value as
of a particular date shall mean the average of the daily closing prices for the
preceding thirty (30) trading days before the day in question. The closing price
for each day shall be the last reported sale price or, in case no such reported
sale takes place on such day, the average of the reported closing bid and asked
prices, in either case on the principal national securities exchange on which
the Common Stock is listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange, the average of the closing bid
and asked prices as reported by the National Association of Securities Dealers
Automated Quotation System. If such quotations are unavailable, or with respect
to other appropriate security, property, assets, business or entity, Fair Market
Value shall be determined mutually by the Board of Directors and the holder or,
if the Board of Directors and the holder shall fail to agree, at the Company's
expense, by a firm of independent certified public accountants of recognized
national standing (who have not been employed by the Company within the last
five years) acceptable to the holder (an "Appraiser"). Any determination of the
Fair Market Value by an Appraiser shall be based on a valuation of the Company
as an entirety without regard to any discount for minority interests or
disparate voting rights among classes of capital stock. The Adjusted Fair Market
Value per share of a security shall be equal to the Fair Market Value of such
security, less 10% of such Fair Market Value, and less the amount of reasonable
and documented out-of-pocket fees and expenses, if any, incurred by the Company
as a result of the issuance of the securities being evaluated, divided by the
total number of securities so issued on a fully diluted basis, which amount of
reasonable and documented fees and expenses so subtracted shall, for all
purposes under this Warrant, be capped at 5% of such security's Fair Market
Value.
(k) Company to Prevent Dilution. The Company shall not,
by amendment of its organizational documents, by entering into any contract,
agreement or understanding with any third party or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
carrying out of all the provisions of this Section 4 with the tenor and purpose
of such section.
(l) Share Adjustment Limit. Notwithstanding anything to
the contrary set forth in Section 4(f) hereof, the maximum number of additional
shares of Common Stock acquirable upon the exercise of all warrants issued
pursuant to the Purchase Agreement pursuant to the anti-dilution provisions set
forth in Section 4(f) therein shall not exceed the Pre-Stockholder Approval
Number (as defined in Section 4 (m)). Accordingly, the adjustment to the number
of shares of Common Stock acquirable upon the exercise of all warrants issued
pursuant
14
to the Purchase Agreement pursuant to the anti-dilution provisions set forth in
Section 4(f) therein shall be made on a pro rata basis (based on the number of
additional shares of Common Stock that would have been acquirable upon the
exercise of each such warrant pursuant to the anti-dilution provisions set forth
in Section 4(f) therein had the Adjustment Limit (as defined below) not been
reached) among all such warrants entitled to such adjustment (at the time of
such entitlement) until the Adjustment Limit is reached. Once a number of shares
of Common Stock equal to the Pre-Stockholder Approval Number is issued pursuant
to the anti-dilution provisions set forth in Section 4(f) of the warrants issued
pursuant to the Purchase Agreement upon the exercise thereof, no additional
shares of Common Stock may be issued upon the exercise of any such warrant
issued pursuant to the Purchase Agreement pursuant to the anti-dilution
provisions set forth in Section 4(f) therein (such limitation, the "Adjustment
Limit"). Any share of Common Stock issued pursuant to any warrant issued
pursuant to the Purchase Agreement in excess of the Adjustment Limit shall
automatically be deemed cancelled. The Adjustment Limit shall act merely to
limit the number of additional shares of Common Stock issuable upon the exercise
of the Warrants after giving effect to the provisions set forth in Section 4(f)
therein, and not to restrict any adjustments to the Warrant Price pursuant to
this Warrant, and shall not affect any matter other than the exercise of the
Warrants into shares of Common Stock. In addition, once the Adjustment Limit has
been reached, upon (and in addition) to each adjustment of the Warrant Price
pursuant to Section 4(f) hereof (the Warrant Price as so adjusted, the
"Initially Adjusted Price"), the Warrant Price per share of Common Stock shall
be further adjusted to the amount computed using the following formula (the
Warrant Price as so further adjusted, the "Further Adjusted Price"):
X = Y-( A )
-----
B
Where:
X = the Further Adjusted Price
Y = the Initially Adjusted Price
A = the Adjusted Fair Market Value (as of the date of
issue or sale, or deemed issue or sale, of securities
by the Company that triggered the anti-dilution
adjustments pursuant to Section 4(f) hereof) of the
additional number of shares of Common Stock that
would have been issuable upon the exercise of this
Warrant pursuant to Section 4(f), but became
non-issuable pursuant to this Section 4(l) because
the Adjustment Limit has been reached
B = the total number of Shares of Common Stock acquirable
upon the exercise of this Warrant on an "as fully
exercised basis" at the time of such adjustment
(giving effect to the Adjustment Limit)
(m) Pre-Stockholder Approval Number. For purposes of
this Warrant, "Pre-Stockholder Approval Number" shall equal to 438,599 shares of
Common Stock (subject to adjustment to reflect stock splits, stock dividends,
stock combinations, recapitalizations and like occurrences).
15
5. Notice of Adjustments. Whenever the Warrant Price or the
number of Warrant Shares purchasable hereunder shall be adjusted pursuant to
Section 4 hereof, the Company shall make a certificate signed by its 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 Warrant Shares
purchasable hereunder after giving effect to such adjustment, which shall be
mailed, by first class mail, postage prepaid 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 Fair Market Value of a share
of Common Stock on the date of exercise.
7. Transfer of Warrant.
(a) Warrant Register. The Company will maintain a
register (the "Warrant Register") containing the names and addresses of the
holder or holders of the Warrants. Any holder of this Warrant, or any portion
thereof may change his or her address as shown on the Warrant Register by
written notice to the Company requesting such change. Any notice or written
communication required or permitted to be given to the holder may be delivered
or given by mail to such holder as shown on the Warrant Register and at the
address shown on the Warrant Register. Until this Warrant is transferred on the
Warrant Register of the Company, the Company may treat the holder as shown on
the Warrant Register as the absolute owner of this Warrant for all purposes,
notwithstanding any notice to the contrary.
(b) Warrant Agent. The Company may, by written notice
to the holder, appoint an agent for the purpose of maintaining the Warrant
Register referred to in Section 7(a) above, issuing the Common Stock or other
securities then issuable upon the exercise of this Warrant, exchanging this
Warrant, replacing this Warrant, or any or all of the foregoing. Thereafter, any
such registration, issuance, exchange, or replacement, as the case may be, shall
be made at the office of such agent.
(c) Transferability and Nonnegotiability of Warrant.
This Warrant may not be transferred or assigned in whole or in part without
compliance with all applicable federal and state securities laws by the
transferor and the transferee. Subject to the provisions of this Warrant with
respect to compliance with the Securities Act of 1933, as amended (the
"Securities Act"), title to this Warrant may be transferred by endorsement (by
the holder executing the Assignment Form attached hereto as Exhibit B) and
delivery in the same manner as a negotiable instrument transferable by
endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer. On surrender
of this Warrant for exchange, properly endorsed on the Assignment Form and
subject to the provisions of this Warrant with respect to compliance with the
Securities Act and with the limitations on assignments and transfers contained
in this Section 7, the Company at its expense shall issue to or on the order of
the holder a new warrant or warrants of like tenor, in the name of the holder or
as the holder may direct, for the number of shares issuable upon exercise
hereof.
16
(e) Compliance with Securities Laws.
(1) The holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant and the shares of
Common Stock to be issued upon exercise hereof or
conversion thereof are being acquired solely for the
holder's own account and not as a nominee for any
other party, and for investment, and that the holder
will not offer, sell or otherwise dispose of this
Warrant or any shares of Common Stock to be issued
upon exercise hereof or conversion thereof except
under circumstances that will not result in a
violation of the Securities Act or any state
securities laws.
(2) The Warrant Shares and any other securities issued
upon exercise hereof or conversion thereof shall be
stamped or imprinted with a legend in substantially
the following form (in addition to any legend
required by state securities laws):
"THE SECURITIES EVIDENCED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR WITH ANY SECURITIES COMMISSION
UNDER APPLICABLE STATE SECURITIES OR BLUE
SKY LAWS AND HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW
TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. SUCH SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT
COVERING SUCH SECURITIES OR THE ISSUER
RECEIVES AN OPINION OF COUNSEL STATING THAT
SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT."
8. Replacement of Warrants or Stock Certificates. The Company
covenants to the holder hereof that, upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or any stock certificate and, in the case of any loss, theft or
destruction, upon receipt of an executed lost securities bond or indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation
upon surrender and cancellation of such Warrant or stock certificate, the
Company will make and deliver a new Warrant or stock certificate, of like tenor,
in lieu of the lost, stolen, destroyed or mutilated Warrant or stock
certificate.
17
9. Rights as Stockholders; Information. No holder of this
Warrant, as such, shall be entitled to vote or receive dividends or be deemed
the holder of Common Stock or any other securities of the Company which may at
any time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the holder of this Warrant, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of the directors or upon any matter submitted to stockholders at
any meeting thereof, or to receive notice of meetings, or to receive dividends
or subscription rights or otherwise, until this Warrant shall have been
exercised and the Warrant Shares purchasable upon the exercise hereof shall have
become deliverable, as provided herein. The foregoing notwithstanding, the
Company will transmit to the holder of this Warrant such information, documents
and reports as are generally distributed to the holders of any class or series
of the securities of the Company concurrently with the distribution thereof to
the stockholders.
(a) Registration. Holders of the Warrant Shares shall
have the registration rights set forth in the Registration Agreement, including,
without limitation, the right to require the Company into maintain the
effectiveness of the Shelf Registration Statement covering the Warrant Shares
until such time as all the Warrant Shares have been sold.
10. Special Agreements of the Company.
(a) Reservation of Shares. The Company covenants and
agrees that all Warrant Shares will, upon issuance, be validly issued, fully
paid and non-assessable and free from all preemptive rights of any shareholder,
and from all taxes, liens and charges with respect to the issue thereof. 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, a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this Warrant. The
Company hereby covenants and agrees to take all such action as may be necessary
to assure that the par value per share of the Common Stock is at all times equal
to or less than the Warrant Price.
(b) Avoidance of Certain Actions. The Company will not,
by amendment of its articles of incorporation, certificate of incorporation or
any other charter document through any reorganization, transfer of assets,
consolidation, merger, issue or sale of securities or otherwise, avoid or take
any action which would have the effect of avoiding the observance or performance
of any of the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in carrying out all of the provisions of
this Warrant and in taking all of such action as may be necessary or appropriate
in order to protect the rights of the holders against dilution or other
impairment of their rights hereunder.
(c) Securing Governmental Approvals.
(i) If any shares of Common Stock required to be
reserved for the purposes of exercise of this Warrant require registration with
or approval of any governmental authority under any federal law (other than the
Securities Act) or under any state law before such shares may be issued upon
exercise of this Warrant, the Company will, at its expense, as expeditiously as
possible, cause such shares to be duly registered or approved, as the case may
be.
18
(ii) If APPROVALS OF, OR FILINGS OR REGISTRATIONS
WITH, THE FEDERAL TRADE COMMISSION AND DEPARTMENT OF JUSTICE PURSUANT TO THE
XXXX-XXXXX-XXXXXX ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED ("HSR") ARE
REQUIRED UNDER APPLICABLE LAW BEFORE CERTAIN SHARES OF COMMON STOCK may be
issued upon exercise of this Warrant, AND THE HOLDER DESIRES TO EXERCISE THIS
WARRANT FOR SUCH SHARES, THEN, THE COMPANY SHALL: (X) WITHIN 10 BUSINESS DAYS OF
RECEIPT OF NOTICE OF EXERCISE FOR SUCH SHARES FROM SUCH HOLDER, PREPARE AND MAKE
ALL FILINGS REQUIRED TO BE MADE BY THE COMPANY PURSUANT TO THE NOTIFICATION AND
REPORTING OBLIGATIONS OF HSR AND (Y) USE ITS BEST EFFORTS TO AS PROMPTLY AS
POSSIBLE TAKE, OR CAUSE TO BE TAKEN, AND COOPERATE WITH SUCH HOLDER TO TAKE, ALL
OTHER ACTIONS AND DO, OR CAUSE TO BE DONE, ALL THINGS NECESSARY, PROPER OR
APPROPRIATE UNDER APPLICABLE LAWS AND REGULATIONS TO CONSUMMATE AND MAKE
EFFECTIVE THE EXERCISE OF THIS WARRANT FOR SUCH SHARES. THE COMPANY SHALL PAY
THE FILING FEES ASSOCIATED WITH THE FILINGS UNDER HSR.
(d) Listing on Securities Exchanges; Registration. If,
and so long as, any class of the Company's Common Stock shall be listed on any
national securities exchange (as defined in the Exchange Act) or NASDAQ, the
Company will, at its expense, obtain and maintain the approval for listing upon
official notice of issuance of all Warrant Shares and maintain the listing of
Warrant Shares after their issuance; and the Company will so list on such
national securities exchange or NASDAQ, will register under the Exchange Act (or
any similar statute then in effect), and will maintain such listing of, any
other securities that at any time are issuable upon exercise of this Warrant if
and at the time any securities of the same class shall be listed on such
national securities exchange or NASDAQ by the Company.
(e) Compliance with Law. The Company shall comply with
all applicable laws, rules and regulations of the United States and of all
states, municipalities and agencies and of any other jurisdiction applicable to
the Company and shall do all things necessary to preserve, renew and keep in
full force and effect and in good standing its corporate existence and authority
necessary to continue its business.
(f) Notices of Stock Dividends, Subscriptions,
Reclassifications, Consolidations, Mergers, etc. If at any time: (1) the Company
shall declare a cash dividend (or an increase in the then existing dividend
rate), or declare a dividend on Common Stock payable otherwise than in cash out
of its net earnings after taxes for the prior fiscal year; or (2) the Company
shall authorize the granting to the holders of Common Stock of rights to
subscribe for or purchase any shares of capital stock of any class or of any
other rights; or (3) there shall be any capital reorganization, or
reclassification, or redemption of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or substantially all
of its assets to, another corporation or firm; or (4) there shall be a voluntary
or involuntary dissolution, liquidation or winding up of the Company, then the
Company shall give to the holders at the addresses of such holders as shown on
the books of the Company, at least twenty (20) days prior to the applicable
record date hereinafter specified, a written notice summarizing such action or
event and stating the record date for any such dividend or rights (or, if a
record date is not to be selected, the date as of which the holders of Common
Stock of record entitled to such dividend or rights are to be determined), the
date on which any such reorganization, reclassification, consolidation, merger,
sale of assets, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected the holders of Common Stock
of record shall be entitled to effect any exchange of their shares of Common
Stock for cash (or cash
19
equivalent), securities or other property deliverable upon any such
reorganization, reclassification, consolidation, merger, sale of assets,
dissolution, liquidation or winding up.
11. Modification and Waiver. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.
12. Notices. Unless otherwise specifically provided herein, all
communications under this Warrant shall be in writing and shall be deemed to
have been duly given if given in accordance with Section 12.3 of the Purchase
Agreement.
13. Governing Law. It is the intention of the parties that the
internal substantive laws, and not the laws of conflicts, of Delaware should
govern the enforceability and validity of this Warrant, the construction of its
terms and the interpretation of the rights and duties of the parties.
14. Acceptance. Receipt of this Warrant by the holder hereof shalL
constitute acceptance of and agreement to the foregoing terms and conditions.
[Signature page follows.]
20
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
on its behalf by one of its officers thereunto duly authorized.
CARDIAC SCIENCE, INC.
By:
Name:
Title:
Address:
Dated: as of March 16, 2004
