Exhibit 10.2
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE (Y)ACT"), OR THE SECURITIES LAWS OF
ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE
OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.
WARRANT TO PURCHASE STOCK
Company: Zynex Medical Holdings, Inc., a Nevada corporation
Number of Shares: 50,000
Class of Stock: Series Common
Warrant Price: $0.71 per share
Issue Date: Is the Warrant Effective Date, which is the date in which the Holder
executes this Warrant Expiration Date: The 7th anniversary after the Issue Date
THIS WARRANT CERTIFIES THAT, for the agreed upon value of $1.OO and for
other good and valuable consideration, SILICON VALLEY BANK ("Holder") is
entitled to purchase the number of fully paid and nonassessable shares of the
class of securities (the "Shares") of Zynex Medical, Inc., a Colorado
corporation (the "Company") at the Warrant Price, all as set forth above and as
adjusted pursuant 10 Article 2 of this Warrant, subject to the provisions and
upon the terms and conditions set forth in this Warrant.
ARTICLE 1. EXERCISE.
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1.1 Method of Exercise. Holder may exercise this Warrant by delivering a
duly executed Notice of Exercise in substantially the form attached as Appendix
1 to the principal office of the Company. Unless Holder is exercising the
conversion right set forth in Article 1.2, Holder shall also deliver to the
Company a check, wire transfer (to an account designated by the Company), or
other form of payment acceptable to the Company for the aggregate Warrant Price
for 'the Shares being purchased.
1.2 Conversion Right. In lieu of exercising this Warrant as specified in
Article 1.1, Holder may from time to time convert this Warrant, in whole or in
part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share. The fair market value of the Shares shall be
determined pursuant. to Article 1.3.
1.3 Fair Market Value. If the Company's common stock is traded in a public
market and the Shares are common stock, the fair market value of each Share
shall be the closing price of a Share reported for the business day immediately
before Holder delivers its Notice of Exercise to the Company (or in the instance
where the
Warrant is exercised immediately prior to the effectiveness of the Company's
initial public offering, the "price to public" per share price specified in the
final prospectus relating to such offering). If the Company's common stock is
traded in a public market and the Shares are preferred stock, the fair market
value of a Share shall be the closing price of a share of the Company's common
stock reported for the business day immediately before Holder delivers its
Notice of Exercise to the Company (or, in the instance where the Warrant is
exercised immediately prior to the effectiveness of the Company's initial public
offering, the initial "price to public" per share price specified in the final
prospectus relating to such offering), in both cases, multiplied by the number
of shares of the Company's common stock into which a Share is convertible. If
the Company's common stock is not traded in a public market, the Board of
Directors of the Company shall determine fair market value in its reasonable
good faith judgment.
1.4 Delivery of Certificate and New Warrant. Promptly after Holder
exercises or converts this Warrant and, if applicable, the Company receives
payment of the aggregate Warrant Price, the Company shall deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has 'not expired, a new Warrant representing the
Shares not so acquired.
1.5 Replacement of Warrants. On receipt Of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the
case of mutilation on surrender and cancellation of this Warrant, the Company
shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.
1.6 Treatment of Warrant Upon Acquisition of Company.
1.6.1 "Acquisition". For the purpose of this Warrant, "Acquisition" means
any sale, license, or other disposition of all or substantially all of the
assets of the Company, or any reorganization, consolidation, or merger of the
Company where the holder of the Company's securities before the transaction,
beneficially own less than 50% of the outstanding voting securities of the
surviving entity after the transaction., .
1.6.2 Treatment of Warrant at Acquisition.
A) Upon the written request of the Company, Holder agrees-that, in the event of
an Acquisition that is not an asset sale and in which the sole consideration is
cash, either (a) Holder shall exercise its conversion or purchase right under
this Warrant and such exercise will be deemed effective immediately prior to the
consummation of such Acquisition or (b) if Holder elects not to exercise the
Warrant, this Warrant will expire upon the consummation of such Acquisition. The
Company shall provide the Holder with written notice of its request relating to
the foregoing (together with such reasonable information as the Holder may
request in connection with such contemplated Acquisition giving rise to such
notice), which is to be delivered to Holder, not less than ten (10) days prior
to the closing of the proposed Acquisition.
B) Upon the written request of the Company, Holder agrees that, in the event of
an Acquisition that is an "arms length" sale of all or substantially all of the
Company's assets (and only its assets) to a third party that is not an Affiliate
(as defined below) of
the Company (a "True Asset Sale), either (a) Holder shall exercise its
conversion or purchase right under this Warrant and such exercise will be deemed
effective immediately prior to the consummation of such Acquisition or (b) if
Holder elects not to exercise the Warrant, this Warrant will continue until the
Expiration Date if the Company continues as a going concern following the
closing of any such, True Asset Sale. The Company shall provide the Holder with
written notice of its request relating to the .foregoing (together with such
reasonable information as the Holder may request 'in connection with such
contemplated Acquisition giving rise to such notice), which is to be delivered
to Holder not less than ten (10) days prior to the closing of the proposed
Acquisition.
C) ,Upon the closing .of any Acquisition other than those particularly described
in subsections (A) and (B) above, the successor entity shall assume the
obligations of this Warrant, and this Warrant shall be exercisable for the same
securities, cash, and property as would be payable for the Shares issuable upon
exercise of the unexercised portion. of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing. The
Warrant Price and/or number of Shares shall be adjusted accordingly.
As used herein "Affiliate" shall mean any person or entity that owns or controls
directly or indirectly ten (10) percent or more of the stock of Company, any
person or entity that controls or is controlled by or is under common control
with such persons or entities, and each of such person's or entity's officers,
directors, joint ventures or partners, as applicable.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
--------------------------
2.1 Stock Dividends. Splits. Etc. If the Company declares or pays a
dividend' on the Shares payable in common stock, or other securities, then' upon
exercise of this Warrant, for each Share acquired, Holder shall receive, without
cost to Holder, the total number and kind of securities to which Holder would
have been entitled had Holder owned the Shares of record as of the date the
dividend occurred. If the Company subdivides the Shares by reclassification or
otherwise into a greater number of shares or takes any other action which
increase the amount of stock into which the Shares are convertible, the number
of shares purchasable hereunder shall be proportionately increased and the
Warrant Price shall be proportionately decreased. If the outstanding shares are
combined or consolidated, .,by reclassification or otherwise', into a lesser
number of shares, the Warrant Price shall be proportionately increased and the
number of Shares shall be proportionately decreased'
2.2 Reclassification. Exchange. Combinations or Substitution. Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for, the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event. Such an event shall include any automatic conversion of the
outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company's Articles or
Certificate (as applicable) of Incorporation upon the closing of a registered
public offering of the Company's common stock. The Company or its successor
shall promptly
issue to Holder an amendment to this Warrant setting forth the number and kind
of such new securities or other property issuable upon exercise or conversion of
this Warrant as a result of such reclassification, exchange, substitution or
other event that results in a change of the number and/or class of securities
issuable upon exercise or conversion of this Warrant. The amendment to this
Warrant shall provide for adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Article 2 including,
without limitation; adjustments to the Warrant Price and to the number of
securities or property issuable upon exercise of the new Warrant. The provisions
of this Article 2.2 shall similarly apply to successive reclassifications,
exchanges, substitutions, or other events.
2.3 Intentionally Omitted.
2.4 No Impairment. The Company shall not, by amendment of its Articles or
Certificate (as applicable) of Incorporation or through a reorganization,
transfer of assets, consolidation, merger, dissolution, issue,' or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this
Warrant by the Company, but shall at all times in good faith assist in carrying
out of all the provisions of this Article 2 and in taking all such action as may
be necessary or appropriate to protect Holder's rights under this Article
against impairment. ' .
2.5 Fractional Shares. No fractional Shares shall be issuable upon exercise
en conversion of this Warrant and the number of Shares to be issued shall be
rounded down to the nearest whole Share. If a fractional share interest arises
upon any exercise or conversion of the Warrant, the Company shall eliminate such
fractional share interest by paying Holder the amount computed by multiplying
the fractional interest by the fair market value of a full Share. '
2.6 Certificate as to Adjustments. Upon each adjustment of the Warrant
Price, the Company shall promptly notify Holder in writing, and, at the
Company's expense, promptly compute such adjustment, and furnish Holder with a
certificate of its Chief Financial Officer setting forth such adjustment and the
facts upon which such adjustment is based. The Company shall, upon written
request, furnish Holder a certificate setting forth the Warrant Price in effect
upon the date thereof and the series of adjustments leading to such Warrant
Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
---------------------------------------------
3.1 Representations and Warranties. The Company represents and warrants to
the Holder as follows: '
(a) The initial Warrant Price referenced on the first page of this Warrant
is not greater than the average fair market value of the Shares as of the five
trading days immediately prior to the date of this Warrant.
(b) All Shares which may be issued upon the exercise of the purchase right
represented by this Warrant, and all securities, if any, issuable upon
conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.
3.2 Notice of Certain Events. If the Company proposes at any time (a) to
declare any dividend or distribution upon any of its stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for sale any shares of the Company's capital stock (or other
securities convertible into such capital stock), other than (i) pursuant to the
Company's stock option or other compensatory plans, (ii) in connection with
commercial credit arrangements or equipment financings, or (Hi) in connection
with strategic transactions for purposes other than capital raising; (c) to
effect any reclassification or recapitalization of any of its stock; (d) to
merge or consolidate with or into any other corporation, or sell, lease,
license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (e) offer holders of registration rights the opportunity
to participate in an underwritten public offering of the Company's securities
for cash, then, in connection with each such event, the Company shall give
Holder: (1) at least 10 days prior written notice of the date on which a record
will be taken for such dividend, distribution, or subscription rights (and
specifying the date on which the holders of common stock will be entitled
thereto) or for determining rights to vote, if any, in respect of the matters
referred to in (a) and (b) above; (2) in the case of the matters referred to in
(c) and (d) above at least 10 days prior written notice of the date when the
same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event); and (3) in the case of
the matter referred to in (e) above, the same notice as is given to the holders
of such registration rights.
3.3 Intentionally Omitted.
3.4 No Shareholder Rights. Except as provided in this Warrant, the Holder
will not have .any rights as a shareholder of the Company until the exercise of
this Warrant.
ARTICLE 4. REPRESENTATIONS. WARRANTIES OF THE HOLDER.
------------------------------------------
The Holder represents and warrants to the Company as follows:
4.1 Purchase for Own Account. This Warrant and the securities to be
acquired upon exercise of this Warrant by the Holder will be acquired for
investment for the Holder's account, not as a nominee or agent, and not with a
view to the public resale or distribution within the meaning of the Act. Holder
also represents that the Holder has not been formed for the specific purpose of
acquiring this Warrant or the Shares.
4.2 Disclosure of Information. The Holder has received or has had full
access to all the information it considers necessary or appropriate to make an
informed investment decision with respect to the acquisition of this Warrant and
its underlying securities. The Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to the Holder or to which the
Holder has access.
4.3 Investment Experience. The Holder understands that the purchase of this
Warrant and its underlying securities involves substantial risk. The Holder has
experience as an investor in securities of companies in the development stage
and acknowledges that the Holder can bear the economic risk of such Holder's
investment in this Warrant and its underlying securities and has such knowledge
and experience in financial or business matters that the Holder is capable of
evaluating the merits and risks of its investment in this Warrant and its
underlying securities and/or has a preexisting personal or business relationship
with the Company and certain of its officers, directors or controlling persons
of a nature and duration that enables the Holder to be aware of the character,
business acumen and financial circumstances of such persons.
4.4 Accredited Investor Status. The Holder is an "accredited investor"
within the meaning of Regulation D promulgated under the Act.
4.5 The Act. The Holder understands that this Warrant and the Shares
issuable upon exercise or conversion hereof have not been registered under the
Act in reliance upon a specific exemption there from, which exemption depends
upon, among other things, the bona fide nature of the Holder's investment intent
as expressed herein. The Holder understands that this Warrant and the Shares
issued upon any exercise or conversion hereof must be held indefinitely unless
subsequently registered under the Act and qualified under applicable state
securities laws, or unless exemption from such registration and qualification
are otherwise available.
ARTICLE 5. MISCELLANEOUS.
--------------
5.1 Term: This Warrant is exercisable in whole or in part at any time and
from time to time on or before the Expiration Date.
5.2 Legends. This Warrant and the Shares (and the securities Issuable,
directly or indirectly, upon conversion of the Shares, if any) shall be
imprinted with a legend in substantially the following form:
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5
BELOW, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE 5T A
TE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION
5.3 Compliance with Securities Laws on Transfer. This Warrant and the
Shares issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested by the Company). The Company shall not require Holder to provide an
opinion of counsel if the transfer is to Holder's parent company, SVB Financial
Group (formerly Silicon Valley Bancshares), or any other affiliate of Holder.
Additionally, the Company shall also not require an opinion of counsel if there
is no material question as to the availability of current information as
referenced in Rule 144(c), Holder represents that it has complied with Rule
144(d) and (e) in reasonable detail, the selling broker represents that it has
complied with Rile 144(f), and the Company is provided with a copy of-Holder's
notice of proposed sale.
5.4 Transfer Procedure. Upon receipt by Holder of the executed Warrant,
Holder will transfer all of this Warrant to Holder's parent company, SVB
Financial Group, by execution of an Assignment substantially in the form of
Appendix 2. Subject to the provisions of Article 5.3 and upon providing Company
with written notice, SVB Financial Group and any, subsequent Holder may transfer
all or part of this Warrant or the Shares issuable upon exercise of this Warrant
(or the Shares issuable directly or indirectly, upon conversion of the Shares,
if any) to any transferee, provided, however, in connection with any such
transfer, SVB Financial Group or any subsequent Holder will give the Company
notice of the portion of the Warrant being transferred with the name, address
and taxpayer identification number of the transferee and Holder will surrender
this Warrant to the Company for reissuance to the transferee(s) (and Holder if
applicable). The Company may refuse to transfer this Warrant or the Shares to
any person who directly competes with the Company, unless, in either case, the
stock of the Company is publicly traded.
5.5 Notices. All notices and other communications from the Company to the
Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, at such address as may have been furnished to the Company or the
Holder, as the case may (or on the first business day after transmission by
facsimile) be, in writing by the Company or such Holder from time to time.
Effective upon receipt of the fully executed Warrant and the initial transfer
described in Article 5.4 above, all notices to the Holder shall be addressed as
follows until the Company receives notice of a change of address in connection.
with a transfer or otherwise:
SVB Financial Group
Attn: Treasury Department 0000 Xxxxxx
Xxxxx, XX 000 Xxxxx Xxxxx, XX 00000
Telephone: 000-000-0000 Facsimile:
000-000-0000
Notice to the Company shall be addressed as follows until the Holder receives
notice of a change in address:
Zynex Medical, Inc.
0000 Xxxxx Xxxx Xxx, Xxxxx X-0 Xxxxxxxxx,
XX 00000
Attn:____________________________________
(ADDRESS):_______________________________
Telephone:_______________________________
Facsimile:_______________________________
5.6 Waiver. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
5.7 Attorneys' Fees. In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorney's fees.
5.8 Automatic Conversion Upon Expiration. In the event that, upon the
Expiration Date, the fair market value of one Share (or other security issuable
upon the exercise hereof) as determined in accordance with Section 1.3 above is
greater than the Warrant Price in effect on such date, then this Warrant shall
automatically be deemed on and as of such date to be converted pursuant to
Section 1.2 above as to all Shares (or such other securities) for which it shall
not previously have been exercised or converted, and the Company shall promptly
deliver a certificate representing the Shares (or such other securities) issued
upon such conversion to the Holder.
5.9 Counterparts. This Warrant may be executed in counterparts, all of
which together shall constitute one and the same agreement.
5.10 Governing Law. This Warrant shall be governed. by and construed in
accordance with the laws of the State of California, 'without giving effect to
its principles regarding conflicts of Jaw.
"COMPANY"
ZYNEX MEDICAL, INC.
By: By:
----------------------------------- -------------------------------------
Name: Name:
--------------------------------- -----------------------------------
(Print) (Print) Title: Chief Financial
Title: Chairman of the Board, Officer, Secretary, Assistant
President or Vice President Treasurer or Assistant Secretary
"HOLDER"
SILICON VALLEY BANK
By:
-----------------------------------
Name:
---------------------------------
(Print)
Title:
--------------------------------
Warrant Effective Date:
--------------
APPENDIX 1
NOTICE OF EXERCISE
1. Holder elects to purchase _________ shares of the Common/Series______
Preferred [strike one] Stock of Zynex Medical, Inc. pursuant to the terms of the
attached Warrant, and tenders payment of the purchase price of the shares in
full.
[or]
1. Holder elects to convert the attached Warrant into Shares/cash [strike
one] in the manner specified in the Warrant. This conversion is exercised for
_________ of the Shares covered by the Warrant.
[Strike paragraph that does not apply.]
2. Please issue a certificate or certificates representing the shares in
the name specified below:
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Holders Name
----------------------------------------------
----------------------------------------------
(Address)
3. By its execution below and for the benefit of the Company, Holder hereby
restates each of the representations and warranties in Article 4 of the Warrant
as the date hereof.
HOLDER:
--------------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
(Date):
--------------------------------
APPENDIX 2
ASSIGNMENT
----------
For value received, Silicon Valley Bank hereby sells, assigns and transfers unto
Name: SVB Financial Group
Address: 0000 Xxxxxx Xxxxx (XX-000)
Xxxxx Xxxxx, XX 00000
Tax lD: 00-0000000
that certain Warrant to Purchase Stock issued by _______________________ (the
"Company"), on _________,200__ (the "Warrant") together with all rights, title
and interest therein.
SILICON VALLEY BANK
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
(Date):
-------------------------
By its execution below. and for the benefit of the Company, SVB Financial Group
makes each of the representations and warranties set forth in Article 4 of the
Warrant and agrees to all other provisions of the Warrant as of the date hereof.
SVB FINANCIAL GROUP
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
