WARRANT AGREEMENT
WARRANT AGREEMENT dated as of __________________, 1998 by and between
Hypertension Diagnostics, Inc., a Minnesota corporation (the "Company"), and
Firstar Trust Company, as Warrant Agent (the "Warrant Agent").
A. The Company proposes to issue up to 2,500,000 Redeemable Class A
Warrants (the "Warrants") evidencing the right to purchase an aggregate of up
to 2,500,000 authorized but previously unissued shares of Common Stock, $.01
par value per share, of the Company (the "Common Stock"). The Warrants would
be issued in connection with the issuance by the Company of up to 2,500,000
Units, each Unit consisting of one share of Common Stock and one Warrant, in
connection with the Company's Registration Statement on Form SB-2. In
addition, solely for purposes of covering overallotments, the Company
proposes to grant to the underwriter, for its account, the option to purchase
up to an additional 375,000 Units.
B. The Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent desires so to act, in connection with the
issuance, registration, transfer, exchange and exercise of the Warrants.
NOW THEREFORE, it is agreed as follows:
ARTICLE I.
APPOINTMENT OF WARRANT AGENT; ISSUANCE,
FORM AND EXECUTION OF WARRANT CERTIFICATES
SECTION 1.1 APPOINTMENT OF WARRANT AGENT. The Company hereby
appoints the Warrant Agent to act as agent for the Company, and the Warrant
Agent hereby accepts the agency established herein and agrees to perform its
agency duties in accordance with the terms and conditions of this Warrant
Agreement.
SECTION 1.2 WARRANT CERTIFICATES. The Company shall execute and
deliver to the Warrant Agent certificates which the Company has authorized to
represent the Warrants ("Warrant Certificates"). The Warrant Certificates
shall be substantially as set forth in Exhibit A hereto and may have such
legends, summaries or endorsements printed, lithographed or engraved thereon
as the Company may deem appropriate and as are not inconsistent with the
provisions of this Warrant Agreement, or as may be required to comply with
any law or with any rule or regulation relating to listing of the Warrants on
the Nasdaq Stock Market, including the SmallCap Market, or on any stock
exchange or to conform to usage. The Warrant Certificates shall be dated
with the date of their issuance.
SECTION 1.3 EXECUTION OF WARRANT CERTIFICATES. The Warrant Certificates
shall be executed on behalf of the Company by a duly authorized officer of the
Company, either manually or by facsimile signature printed thereon. The Warrant
Certificates shall be manually countersigned by the Warrant Agent and shall not
be valid for any purpose unless so countersigned. Any Warrant Certificate may
be signed on behalf of the Company by the person who at the actual date of the
signing of such Warrant Certificate shall have been the proper officer of the
Company, although at the date of issuance of such Warrant Certificate any such
person has ceased to be such officer of the Company.
ARTICLE II.
EXERCISE OF WARRANTS
SECTION 2.1 EXERCISE. Any or all of the Warrants represented by each
Warrant Certificate may be exercised by the holder thereof on or before 5:00
p.m., Minneapolis time, on _________, 2002, unless extended by the Company,
by surrender of the Warrant Certificate with the Purchase Form, which is
printed on the reverse thereof (or a reasonable facsimile thereof) duly
executed by such holder, to the Warrant Agent at its principal office in
Minneapolis, Minnesota, accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in an amount equal
to the product of the number of shares of Common Stock issuable upon exercise
of the Warrant represented by such Warrant Certificate, as adjusted pursuant
to the provisions of Article III hereof, multiplied by the exercise price of
$5.50, as adjusted pursuant to the provisions of Article III hereof (such
price as so adjusted from time to time being herein called the "Exercise
Price"), and such holder shall be entitled to receive such number of fully
paid and nonassessable shares of Common Stock, as so adjusted, at the time of
such exercise.
SECTION 2.2 TIME OF EXERCISE. Each exercise of Warrants shall be
deemed to have been effective immediately prior to the close of business on
the business day on which the Warrant Certificate relating to such Warrants
shall have been surrendered to the Warrant Agent as provided in SECTION 2.1,
and at such time the person or persons in whose name or names any certificate
or certificates for shares of Common Stock shall be issuable upon such
exercise as provided in SECTION 2.3, shall be deemed to have become the
holder or holders of record thereof.
SECTION 2.3 ISSUANCE OF SHARES OF COMMON STOCK; NO FRACTIONAL SHARES.
As soon as practicable after the exercise of any Warrant, and in any event
within ten (10) days after receipt by the Warrant Agent of the notice of
exercise under SECTION 2.1, the Company at its expense (including the payment
by it of any applicable issue taxes) will cause to be issued in the name of
and delivered to the holder thereof or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct,
(a) a certificate or certificates for the number of fully paid
and nonassessable shares of Common Stock to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, an amount in cash equal
to such fraction multiplied by the then current value of a share of
Common Stock, determined as follows:
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(i) if the Common Stock is listed or admitted to unlisted trading
privileges on any single stock exchange, then such current value shall be
computed on the basis of the last reported sale price of the Common Stock
on such exchange on the last business day prior to the date of the
exercise of such Warrant upon which a sale shall have been effected; or
(ii) if the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are reported by Nasdaq,
including the SmallCap Market system (or, if not so quoted on Nasdaq, by
the National Quotation Bureau, Inc.), then the current value shall be the
last reported sale on the last business day prior to the date of the
exercise of such Warrant, or, in the event the last reported sale is
unavailable, the average of the closing bid and asked prices on the last
business day prior to the date of the exercise of such Warrant as so
reported; or
(iii) if the Common Stock is listed or admitted to unlisted
trading privileges on more than one stock exchange or one or more stock
exchanges and quoted on Nasdaq, then the current value shall, if different
as a result of calculation under the applicable method(s) described above
in this SECTION, be deemed to be the higher number calculated in
connection therewith; or
(iv) if the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, then the
current value shall be computed on the basis of the book value of Common
Stock as of the close of business on the last day of the month immediately
preceding the date upon which such Warrant was exercised, as determined by
the Company,
and
(b) in case such exercise includes only part of the Warrants represented
by any Warrant Certificate, a new Warrant Certificate or Warrant Certificates of
like tenor, calling in the aggregate on the face or faces thereof for the number
of shares of Common Stock equal (without giving effect to any adjustment
therein) to the number of such shares called for on the face of such Warrant
Certificate minus the number of such shares designated by the holder for such
exercise as provided in SECTION 2.1. Warrants, represented by a properly
assigned Warrant Certificate, may be exercised by a new holder without first
having a new Warrant Certificate issued.
SECTION 2.4 EXTENSION OF EXERCISE PERIOD; CHANGE OF EXERCISE PRICE. The
Company may, upon notice given to the Warrant Agent, and without the consent of
the holders of the Warrant Certificates, (i) reduce the Exercise Price during
all or any portion of the originally stated exercise period, or (ii) extend the
period over which the Warrants are exercisable beyond _________, 2002 and
increase the Exercise Price for any period the Warrant exercise period is
extended. In the case of the extension of the exercise period or a change in
the Exercise Price, the Company must provide the Warrant Agent and the
Warrantholders of record notice of such extension of the exercise period,
specifying, as the case may be, the time to which such exercise period is
extended, or specifying the new Exercise Price and the periods for which such
new Exercise Price is in effect, a reasonable time
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prior to the date such extension or new Exercise Price is to take effect,
such reasonable time to be commercially reasonable and consistent with
applicable securities laws and regulations.
ARTICLE III.
ANTIDILUTION PROVISIONS
SECTION 3.1 ADJUSTMENT OF EXERCISE PRICE.
(a) The Exercise Price shall be subject to the following
adjustments. In the event that:
(i) any dividends on any class of stock of the Company
payable in Common Stock or securities convertible into Common
Stock shall be paid by the Company;
(ii) the Company shall subdivide its then outstanding
shares of Common Stock into a greater number of shares; or
(iii) the Company shall combine outstanding shares of
Common Stock, by reclassification or otherwise;
then, in any such event, the Exercise Price in effect immediately prior to
such event shall (until adjusted again pursuant hereto) be adjusted
immediately after such event to a price (calculated to the nearest full
cent) determined by dividing (A) the number of shares of Common Stock
outstanding immediately prior to such event, multiplied by the then
existing Exercise Price, by (B) the total number of shares of Common Stock
outstanding immediately after such event (including the maximum number of
shares of Common Stock issuable in respect of any securities convertible
into Common Stock), and the resulting quotient shall be the adjusted
Exercise Price per share.
(b) No adjustment of the Exercise Price shall be made if the
amount of such adjustments shall be less than one cent per share, but in
such case any adjustment that would otherwise be required to be made
shall be carried forward and shall be made at the time and together with
the next subsequent adjustment which, together with any adjustment or
adjustments so carried forward, shall amount to not less than one cent
per share.
SECTION 3.2 ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE ON EXERCISE OF
WARRANTS. Upon each adjustment of the Exercise Price pursuant to SECTION 3.1,
the registered holder of each Warrant shall thereafter (until another such
adjustment) be entitled to purchase at the adjusted Exercise Price the number of
shares, calculated to the nearest full share, obtained by multiplying the number
of shares specified in such Warrant (as adjusted as a result of all adjustments
in the Exercise Price in effect prior to such adjustment) by the Exercise Price
in effect prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.
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SECTION 3.3 NOTICE AS TO ADJUSTMENT. Upon any adjustment of the
Exercise Price and an increase or decrease in the number of shares of Common
Stock purchasable upon the exercise of the Warrants, then, and in each such
case, the Company shall within ten (10) days after the effective date of such
adjustment give written notice thereof, by first class mail, postage prepaid,
addressed to each registered Warrantholder at the address of such
Warrantholder as shown on the books of the Company, which notice shall state
the adjusted Exercise Price and the increased or decreased number of shares
purchasable upon the exercise of the Warrants, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.
SECTION 3.4 EFFECT OF REORGANIZATION, RECLASSIFICATION, MERGER, ETC.
If at any time while any Warrant is outstanding there should be any capital
reorganization or reclassification of the capital stock of the Company (other
than the issue of any shares of Common Stock in subdivision of outstanding
shares of Common Stock by reclassification or otherwise and other than a
combination of shares provided for in SECTION 3.1 hereof) or any
consolidation or merger of the Company with another corporation or any sale,
conveyance, lease or other transfer by the Company of all or substantially
all of its assets to any other corporation, the holder of any Warrant shall,
during the remainder of the period such Warrant is exercisable, be entitled
to receive, upon payment of the Exercise Price, the number of shares of stock
or other securities or property of the Company, or of the successor
corporation resulting from such consolidation or merger, or of the
corporation to which the assets of the Company has been sold, conveyed,
leased or otherwise transferred, as the case may be, to which the Common
Stock (and any other securities and property) of the Company, deliverable
upon the exercise of such Warrant, would have been entitled upon such capital
reorganization, reclassification of capital stock, consolidation, merger,
sale, conveyance, lease or other transfer if such Warrant had been exercised
immediately prior to such capital reorganization, reclassification of capital
stock, consolidation, merger, sale, conveyance, lease or other transfer; and,
in any such case, appropriate adjustment (as determined by the Board of
Directors of the Company) shall be made in the application of the provisions
set forth in this Warrant Agreement with respect to the rights and interests
thereafter of the Warrantholders to the end that the provisions set forth in
this Warrant Agreement (including the adjustment of the Exercise Price and
the number of shares issuable upon the exercise of the Warrants) shall
thereafter be applicable, as near as may be reasonably practicable, in
relation to any shares or other property thereafter deliverable upon the
exercise of the Warrants as if the Warrants had been exercised immediately
prior to such capital reorganization, reclassification of capital stock, such
consolidation, merger, sale, conveyance, lease or other transfer and the
Warrantholders had carried out the terms of the exchange as provided for by
such capital reorganization, reclassification, consolidation or merger. The
Company shall not effect any such capital reorganization, consolidation,
merger or transfer unless, upon or prior to the consummation thereof, the
successor corporation or the corporation to which the property of the Company
has been sold, conveyed, leased or otherwise transferred shall assume by
written instrument the obligation to deliver to the holder of each Warrant
such shares of stock, securities, cash or property as in accordance with the
foregoing provisions such holder shall be entitled to purchase.
SECTION 3.5 PRIOR NOTICE AS TO CERTAIN EVENTS. In case at any time:
(a) The Company shall pay any dividend upon its Common Stock
payable in stock or make any distribution (other than cash dividends)
to the holders of its Common Stock; or
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(b) The Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class
or any other rights; or
(c) There shall be any capital reorganization or reclassification
of the capital stock of the Company, or consolidation or merger of the
Company with, or sale, conveyance, lease or other transfer of all or
substantially all of its assets to, another corporation; or
(d) There shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then in any one or more of such cases, the Company shall give prior written
notice, by first class mail, postage prepaid, addressed to each registered
Warrantholders at the address of such Warrantholders as shown on the books of
the Company, of the date on which (i) the books of the Company shall close or
a record shall be taken for such stock dividend, distribution or subscription
rights or (ii) such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up shall take place, as the case
may be. Such notice shall also specify the date as of which the holders of
the Common Stock of record shall participate in such dividend, distribution
or subscription rights or shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding up, as the case may be. Such written notice shall be given at least
twenty (20) days prior to the action in question and not less than twenty
(20) days prior to the record date or the date on which the Company's
transfer books are closed in respect thereto.
SECTION 3.6 CERTAIN OBLIGATIONS OF THE COMPANY. The Company will
not, by amendment of its articles of incorporation or through any
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 of this Warrant Agreement
or the Warrant Certificate, but will at all times in good faith assist in the
carrying out of all such terms. Without limiting the generality of the
foregoing, the Company (a) will take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of such stock upon the exercise of all Warrants
from time to time outstanding, and (b) will not (i) transfer all or
substantially all of its properties and assets to any other person or entity,
or (ii) consolidate with or merge into any other entity where the Company is
not the continuing or surviving entity, or (iii) permit any other entity to
consolidate with or merge into the Company where the Company is the
continuing or surviving entity but, in connection with such consolidation or
merger, the Common Stock then issuable upon the exercise of the Warrants
shall be changed into or exchanged for shares or other securities or property
of any other entity unless, in any such case, the other entity acquiring such
properties and assets, continuing or surviving after such consolidation or
merger or issuing or distributing such shares or other securities or
property, as the case may be, shall expressly assume in writing and be bound
by all the terms of this Warrant Agreement and the Warrant Certificates.
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SECTION 3.7 RESERVATION AND LISTING OF COMMON STOCK. The Company
will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of the Warrants, all shares of Common Stock from
time to time issuable upon such exercise. All such shares shall be duly and
validly issued, fully paid and nonassessable with no liability on the part of
the holder thereof. The Company, at its expense, will list on each stock
exchange and on Nasdaq on which any Common Stock may then be listed (subject
to official notice of issuance) and will maintain such listing of, the shares
of Common Stock from time to time issuable upon the exercise of the Warrants.
SECTION 3.8 REGISTRATION OR EXEMPTION FOR COMMON STOCK. The Company
will use its best efforts (a) at all times the Warrants are exercisable to
maintain an effective registration statement under the Securities Act of
1933, as amended (the "Act"), covering Common Stock issuable upon exercise of
the Warrants, (b) from time to time to amend or supplement the prospectus
contained in such registration statement to the extent necessary in order to
comply with applicable law, (c) to qualify for exemption from the
registration requirements of the Act the Common Stock issuable upon exercise
of the Warrants, and (d) to maintain exemptions or qualifications, in those
jurisdictions in which the original registration statement relating to the
Warrants was initially qualified, to permit the exercise of the Warrants and
the issuance of the Common Stock pursuant to such exercise. The Warrant
Agent shall have no responsibility for the maintenance of such exemptions or
qualifications or for liabilities arising from the exercise or attempted
exercise of Warrants in jurisdictions where exemptions or qualifications have
not been maintained or are otherwise unavailable.
ARTICLE IV.
REDEMPTION OF WARRANT
SECTION 4.1 REDEMPTION PRICE. The Warrants may be redeemed at the
option of the Company, beginning 90 days after the date hereof following a
period of 14 consecutive trading days where the per share closing bid price
of the Common Stock exceeds $6.50, on notice as set forth in SECTION 4.2, and
at a redemption price equal to $.01 per Warrant. For purposes of this
SECTION, the closing bid price of the Common Stock shall be determined by the
closing bid price as reported by Nasdaq so long as the Common Stock is quoted
on Nasdaq and, if the Common Stock is listed on a stock exchange, shall be
determined by the last reported sale price on the primary exchange on which
the Common Stock is traded.
SECTION 4.2 NOTICE OF REDEMPTION. In the case of any redemption of
Warrants, the Company or, at its request, the Warrant Agent in the name of
and at the expense of the Company shall give notice of such redemption to the
holders of the Warrants to be redeemed as hereinafter provided in this
SECTION 4.2. Notice of redemption to the holders of Warrants shall be given
by mailing by first-class mail a notice of such redemption within 10 business
days following the 14 consecutive trading day period referenced in SECTION 4.1
and not less than 30 days prior to the date fixed for redemption. Any notice
which is given in the manner herein provided shall be conclusively presumed
to have been duly given, whether or not the holder receives the notice. In
any case, failure duly to give such notice, or any defect in such notice, to
the holder of any Warrant Certificate shall not affect the validity of the
proceedings for the redemption of Warrants represented by any other Warrant
Certificate. Each such notice shall specify the date fixed for redemption,
the place of redemption and the redemption price of $.01 at which each
Warrant is to be redeemed, and shall state that payment of the redemption
price of the Warrants will be made on surrender of the Warrants at
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such place of redemption, and that if not exercised by the close of business
on the date fixed for redemption, the exercise rights of the Warrants
identified for redemption shall expire unless extended by the Company. Such
notice shall also state the current Exercise Price and the date on which the
right to exercise the Warrants will expire unless extended by the Company.
SECTION 4.3 PAYMENT OF WARRANTS ON REDEMPTION; DEPOSIT OF REDEMPTION
PRICE. If notice of redemption shall have been given as provided in SECTION
4.2, the redemption price of $.01 per Warrant shall, unless the Warrant is
theretofore exercised pursuant to the terms hereof, become due and payable on
the date and at the place stated in such notice. On and after such date of
redemption, provided that cash sufficient for the redemption thereof shall
then be deposited by the Company with the Warrant Agent for that purpose, the
exercise rights of the Warrants identified for redemption shall expire. On
presentation and surrender of Warrant Certificates at such place of payment
in such notice specified, the Warrants identified for redemption shall be
paid and redeemed at the redemption price of $.01 per Warrant. Prior to the
date fixed for redemption, the Company shall deposit with the Warrant Agent
an amount of money sufficient to pay the redemption price of all the Warrants
identified for redemption. Any monies which shall have been deposited with
the Warrant Agent for redemption of Warrants and which are not required for
that purpose by reason of exercise of Warrants shall be repaid to the Company
upon delivery to the Warrant Agent of evidence satisfactory to it of such
exercise.
ARTICLE V.
CERTAIN OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANT CERTIFICATES
SECTION 5.1 NO RIGHTS OF SHAREHOLDERS. The Warrant Certificates
shall be issued in registered form only. No Warrant Certificate shall
entitle the holder thereof to any of the rights of a holder of shares of
Common Stock of the Company, including, without limitation, the right to
vote, to receive dividends and other distributions, or to receive any notice
of, or to attend, meetings of holders of Common Stock or any other
proceedings of the Company.
SECTION 5.2 LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT
CERTIFICATES. Upon receipt by the Warrant Agent of evidence reasonably
satisfactory to the Warrant Agent of the loss, theft, destruction or
mutilation of any Warrant Certificate, and (a) in the case of any such loss,
theft, or destruction, upon delivery to the Warrant Agent of an indemnity
bond in form and amount, and issued by a bonding company, reasonably
satisfactory to the Company, or (b) in the case of any such mutilation, upon
surrender to and cancellation by the Warrant Agent of such Warrant
Certificate, the Company at its expense will execute and cause the Warrant
Agent to countersign and deliver, in lieu thereof, a new Warrant Certificate
of like tenor.
SECTION 5.3 TRANSFER AGENT; CANCELLATION OF WARRANT CERTIFICATES;
UNEXERCISED WARRANTS. Firstar Trust Company (and any successor), as transfer
agent (the "Transfer Agent"), is hereby irrevocably authorized and directed
at all times to reserve such number of authorized and unissued shares of
Common Stock as shall be sufficient to permit the exercise in full of all
Warrants from time to time outstanding. The Company will keep a copy of this
Agreement on file with the Transfer Agent. The Warrant Agent, and any
successor thereto, is hereby irrevocably authorized to requisition
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from time to time from the Transfer Agent certificates for shares of Common
Stock required for exercise of Warrants. The Company will supply the Transfer
Agent with duly executed certificates for shares of Common Stock for such
purpose and will make available any cash required in settlement of fractional
share interests. All Warrant Certificates surrendered upon the exercise or
redemption of Warrants shall be canceled by the Warrant Agent and shall
thereafter be delivered to the Company; such canceled Warrant Certificates,
with the Purchase Form on the reverse thereof duly filled in and signed,
shall constitute conclusive evidence as between the parties hereto of the
numbers of shares of Common Stock which shall have been issued upon exercises
of Warrants. Promptly after the last day on which the Warrants are
exercisable (set forth in SECTION 2.1 above), the Warrant Agent shall certify
to the Company the aggregate number of Warrants then outstanding and
unexercised. No shares of Common Stock shall be subject to reservation with
respect to Warrants not exercised prior to the time and date identified in
SECTION 2.1 above as the last time and date at which Warrants may be
exercised.
ARTICLE VI.
TRANSFER AND EXCHANGE OF WARRANT CERTIFICATES
SECTION 6.1 WARRANT REGISTER; TRANSFER OR EXCHANGE OF WARRANT
CERTIFICATES. The Warrant Agent shall cause to be kept at the principal
office of the Warrant Agent a register (the "Warrant Register") in which,
subject to such reasonable regulations as the Company may prescribe,
provisions shall be made for the registration of transfers and exchanges of
Warrant Certificates. Upon surrender for transfer or exchange of any Warrant
Certificates, properly endorsed, to the Warrant Agent, the Warrant Agent at
the Company's expense will issue and deliver to or upon the order of the
holder thereof a new Warrant Certificate or Warrant Certificates of like
tenor, in the name of such holder or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common Stock called
for on the face of the Warrant Certificate so surrendered. Any Warrant
Certificate surrendered for transfer or exchange shall be canceled by the
Warrant Agent and shall thereafter be delivered to the Company.
SECTION 6.2 IDENTITY OF WARRANTHOLDERS. Until a Warrant Certificate
is transferred in the Warrant Register, the Company and the Warrant Agent may
treat the person in whose name the Warrant Certificate is registered as the
absolute owner thereof and of the Warrants represented thereby for all
purposes, notwithstanding any notice to the contrary, except that, if and
when any Warrant Certificate is properly assigned in blank, the Company and
the Warrant Agent may (but shall not be obligated to) treat the bearer
thereof as the absolute owner of the Warrant Certificate and of the Warrants
represented thereby for all purposes, notwithstanding any notice to the
contrary.
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ARTICLE VII.
CONCERNING THE WARRANT AGENT
SECTION 7.1 TAXES. The Company will, from time to time, promptly pay
to the Warrant Agent, or make provision satisfactory to the Warrant Agent for
the payment of, all taxes and charges that may be imposed by the United
States or any State upon the Company or the Warrant Agent upon the transfer
or delivery of shares of Common Stock upon the exercise of Warrants, but the
Company shall not be obligated to pay any tax imposed in connection with any
transfer involved in the delivery of a certificate for shares of Common Stock
in any name other than that of the registered holder of the Warrant
Certificate surrendered in connection with the purchase thereof.
SECTION 7.2 REPLACEMENT OF WARRANT AGENT IN CERTAIN CIRCUMSTANCES.
(a) The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder after giving thirty (30)
days' notice in writing to the Company, except that such shorter notice
may be given as the Company shall, in writing, accept as sufficient. The
Company may discharge the Warrant Agent at any time with or without
reason, effective upon thirty (30) days written notice to the Warrant
Agent or such shorter period as the Warrant Agent shall, in writing,
accept as sufficient. If the office of Warrant Agent becomes vacant by
resignation, discharge, incapacity to act or otherwise, the Company shall
appoint in writing a new Warrant Agent, the principal office of which
shall be in Minnesota. If the Company shall fail to make such appointment
within a period of thirty (30) days after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated
Warrant Agent or by the holder of a Warrant Certificate, then the holder
of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new Warrant Agent. Any new Warrant
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United
States or of the State of Minnesota, of good standing, and having its
principal office in Minnesota, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or
examination by Federal or State authority. Any new Warrant Agent
appointed hereunder shall execute, acknowledge and deliver to the
Company an instrument accepting such appointment hereunder and thereupon
such new Warrant Agent without any further act or deed shall become vested
with all the rights, powers, duties and responsibilities of the Warrant
Agent hereunder with like effect as if it had been named as the Warrant
Agent; but if for any reason it becomes necessary or expedient to have
the former Warrant Agent execute and deliver any further assurance,
conveyance, act or deed, the same shall be done and shall be legally and
validly executed and delivered by the former Warrant Agent. Not later
than the effective date of any such appointment the Company shall file
notice thereof with the former Warrant Agent. The Company shall promptly
give notice of any such appointment to the holders of the Warrant
Certificates by mail to their addresses as shown in the Warrant Register.
Failure to file or give such notice, or any defect therein, shall not
affect the legality or validity of the appointment of the successor
Warrant Agent.
(b) Any company into which the Warrant Agent or any new Warrant
Agent may be merged or converted or with which it may be consolidated or
any company resulting from
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any merger, conversion or consolidation to which the Warrant Agent
shall be a party shall be the successor Warrant Agent under this
Warrant Agreement without any further act; provided that if such company
would not be eligible for appointment as a successor Warrant Agent under
the provisions of paragraph (a) of this SECTION 7.2 the Company shall
forthwith appoint a new Warrant Agent in accordance with such provisions.
Any such successor Warrant Agent may adopt the prior countersignature of
any predecessor Warrant Agent and deliver Warrant Certificates
countersigned and not delivered by such predecessor Warrant Agent or may
countersign Warrant Certificates either in the name of any predecessor
Warrant Agent or the name of the successor Warrant Agent.
SECTION 7.3 REMUNERATION OF WARRANT AGENT. The Company will pay the
Warrant Agent reasonable remuneration for its services as Warrant Agent
hereunder and will reimburse the Warrant Agent upon demand for all
expenditures that the Warrant Agent may reasonably incur in the execution of
its duties hereunder.
SECTION 7.4 FURTHER ASSURANCES. The Company will perform, exercise,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the carrying out or
performing by the Warrant Agent of the provisions of this Warrant Agreement.
SECTION 7.5 LIMITATIONS ON LIABILITIES OF THE WARRANT AGENT.
(a) The Warrant Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection of the Warrant Agent as to
any action taken or omitted by it in good faith and in accordance with
such opinion.
(b) Whenever, in the performance of its duties under this Warrant
Agreement, the Warrant Agent shall deem it necessary or desirable that
any matter be proved or established, or that any instructions with respect
to the performance of its duties hereunder be given, by the Company prior
to taking or suffering any action hereunder, such matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established, or such instructions
may be given, by a certificate or instrument signed by an officer of the
Company and delivered to the Warrant Agent; and such certificate or
instrument shall be full authorization to the Warrant Agent for any
action taken or suffered in good faith by it under the provisions of this
Warrant Agreement in reliance upon such certificate or instrument; but
in its discretion the Warrant Agent may in lieu thereof accept other
evidence of such matter or may require such further or additional
evidence as it may deem reasonable.
(c) The Warrant Agent shall be liable hereunder only for its own
negligence or willful misconduct. The Warrant Agent shall act hereunder
solely as agent, and its duties shall be determined solely by the
provisions hereof. The Company agrees to indemnify the Warrant Agent and
save it harmless against any and all liabilities, including judgments,
costs and counsel fees, for anything done or omitted by the Warrant
Agent in the execution of this
11
Warrant Agreement except as a result of the Warrant Agent's negligence
or willful misconduct.
(d) The Warrant Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Warrant Agreement
or in the Warrant Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals are
and shall be deemed to have been made by the Company only.
(e) The Warrant Agent shall not be under any responsibility in
respect to the validity or execution of any Warrant Certificate (except
its countersignature thereof); nor shall it be responsible for any breach
by the Company of any covenant or condition contained in this Warrant
Agreement or in any Warrant Certificate; nor shall it be responsible for
the making of any adjustment in the Exercise Price, or number of shares
issuable upon exercise of the Warrant Certificates or responsible for the
manner, method or amount of any such adjustment or the facts that would
require any such adjustment; nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or
reservation of any shares of Common Stock to be issued pursuant to this
Warrant Agreement or any Warrant Certificate or as to whether any shares
of Common Stock or other securities are or will be validly authorized
and issued and fully paid and nonassessable.
SECTION 7.6 AMENDMENT AND MODIFICATION. The Warrant Agent may,
without the consent or concurrence of the holders of the Warrant
Certificates, by supplemental agreement or otherwise, join with the Company
in making any changes or corrections in this Warrant Agreement that they
shall have been advised by counsel (a) are required to cure any ambiguity or
to correct any defective or inconsistent provision or clerical omission or
mistake or manifest error herein contained, (b) add to the obligations of the
Company in this Warrant Agreement further obligations thereafter to be
observed by it, or surrender any right or power reserved to or conferred upon
the Company in this Warrant Agreement, or (c) do not or will not adversely
affect, alter or change the rights, privileges or immunities of the holders
of Warrant Certificates not provided for under this Warrant Agreement;
provided, however, that any term of this Warrant Agreement or any Warrant
Certificate may be changed, waived, discharged or terminated by an instrument
in writing signed by each party against which enforcement of such change,
waiver, discharge or termination is sought, or by which the same is to be
performed or observed.
ARTICLE VIII.
OTHER MATTERS
SECTION 8.1 SUCCESSORS AND ASSIGNS. All the covenants and provisions
of this Warrant Agreement by or for the benefit of the Company or the Warrant
Agent shall bind and inure to the benefit of their respective successors and
assigns.
12
SECTION 8.2 NOTICES. Any notice or demand authorized by this Warrant
Agreement to be given or made by the Warrant Agent or by the holder of any
Warrant Certificate to or on the Company shall be sufficiently given or made if
sent by first class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Company with the Warrant Agent) as
follows:
Hypertension Diagnostics, Inc.
0000 Xxxxxx Xx, Xxxxx 000
Xxxxx, XX 00000
Any notice or demand authorized by this Warrant Agreement to be given or made by
the holder of any Warrant Certificate or by the Company to or on the Warrant
Agent shall be sufficiently given or made if sent by first class or registered
mail, postage prepaid, addressed (until another address is filed in writing by
the Warrant Agent with the Company) as follows:
Firstar Trust Company
0000 X. XxxxxXxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Corporate Trust Department
SECTION 8.3 GOVERNING LAW. This Warrant Agreement and the Warrant
Certificates are being delivered in the State of Minnesota and shall be
construed and enforced in accordance with and governed by the laws of such
State.
SECTION 8.4 NO BENEFITS CONFERRED. Nothing in this Warrant Agreement
expressed and nothing that may be implied from any of the provisions hereof
is intended, or shall be construed, to confer upon, or give to, any person or
corporation other than the Company, the Warrant Agent, and the holders of the
Warrant Certificates, any right, remedy or claim under or by reason of this
Agreement or of any covenant, condition, stipulation, promise or agreement
herein; and all covenants, conditions, stipulations, promises and agreements
in this Warrant Agreement contained shall be for the sole and exclusive
benefit of the Company, the Warrant Agent, their respective successors and
the holders of the Warrant Certificates.
SECTION 8.5 HEADINGS. The descriptive headings used in this Warrant
Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
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IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the
parties hereto as of the day and year first above written.
HYPERTENSION DIAGNOSTICS, INC.
By____________________________________
Its Chairman of the Board
FIRSTAR TRUST COMPANY
By____________________________________
Its_________________________________
14
EXHIBIT A
No. _____________ Certificate for _________ Warrants
THIS WARRANT CERTIFICATE MAY BE
TRANSFERRED SEPARATELY FROM THE COMMON STOCK CERTIFICATE
WITH WHICH IT IS INITIALLY ISSUED
COMMENCING 10 TRADING DAYS AFTER ________, 1998
EXERCISABLE ON OR BEFORE, AND VOID AFTER,
5:00 P.M. MINNEAPOLIS TIME, _____________. 2002
HYPERTENSION DIAGNOSTICS, INC.
Warrants to Purchase Common Stock of
Hypertension Diagnostics, Inc.
Incorporated Under the Laws of the State of Minnesota
THIS CERTIFIES that CUSIP ______________
or assigns, is the owner of the number of Warrants set forth above, each of
which represents the right to purchase from Hypertension Diagnostics, Inc., a
Minnesota corporation (the "Company"), at any time on or before 5:00
Minneapolis time, ___________, 2002, upon compliance with and subject to the
conditions set forth herein and in the Warrant Agreement hereinafter referred
to, one share (subject to adjustments referred to below) of the Common Stock
of the Company (such shares or other securities or property purchasable upon
exercise of the Warrants being herein called the "Shares"), by surrendering
this Warrant Certificate, with the Purchase Form on the reverse side duly
executed, at the principal office of _______________________________________,
or its successor, as warrant agent (the "Warrant Agent"), and by paying in
full, in cash or by certified or official bank check payable to the order of
the Company, the exercise price of $5.50 per share.
Upon any exercise of less than all the Warrants evidenced by this
Warrant Certificate, there shall be issued to the holder a new Warrant
Certificate in respect of the Warrants as to which this Warrant Certificate
was not exercised.
Upon the surrender for transfer or exchange of any Warrant Certificates,
properly endorsed, to the Warrant Agent, the Warrant Agent at the Company's
expense will issue and deliver to the order of the holder hereof, a new
Warrant Certificate or Warrant Certificates of like tenor, in the name of
such holder or as such holder (upon payment by such holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face
hereof.
The Warrant Certificates are issued only as registered Warrant
Certificates. Until this Warrant Certificate is transferred in the Warrant
Register, the Company and the Warrant Agent may treat the
A-1
person in whose name this Warrant Certificate is registered as the absolute
owner hereof and of the Warrants represented hereby for all purposes,
notwithstanding any notice to the contrary.
This Warrant Certificate is issued under the Warrant Agreement dated as
of ______________, 1998 between the Company and the Warrant Agent. The
Warrant Agreement is hereby incorporated by reference into this Warrant
Certificate and this Warrant Certificate is subject to the terms and
provisions contained in said Warrant Agreement, to all of which terms and
provisions the registered holder of this Warrant Certificate consents by
acceptance hereof. Copies of said Warrant Agreement are on file at the
office of the Warrant Agent in Minneapolis, Minnesota, and may be obtained by
writing to the Warrant Agent.
The number of Shares receivable upon the exercise of the Warrants
represented by this Warrant Certificate and the exercise price per share are
subject to adjustment upon the happening of certain events specified in the
Warrant Agreement.
No fractional Shares of the Company's Common Stock will be issued upon
the exercise of Warrants. As to any final fraction of a share which a holder
of Warrants exercised in the same transaction would otherwise be entitled to
purchase on such exercise, the Company shall pay a cash adjustment in lieu of
any fractional Share determined as provided in the Warrant Agreement.
The Warrants may be redeemed at the option of the Company, at any time
following a period of 14 consecutive trading days where the per share closing
bid price of the Common Stock exceeds $6.50, on notice as set forth in the
Warrant Agreement, and at a redemption price equal to $.01 per Warrant. If
notice of redemption shall have been given as provided in the Warrant
Agreement and cash sufficient for the redemption be deposited by the Company
for that purpose, the exercise rights of the Warrants identified for
redemption shall expire at the close of business on such date of redemption
unless extended by the Company.
This Warrant Certificate shall not entitle the holder hereof to any of
the rights of a holder of Common Stock of the Company, including, without
limitation, the right to vote, to receive dividends and other distributions,
to exercise any preemptive right, or to receive any notice of, or to attend
meetings of holders of Common Stock or any other proceedings of the Company.
This Warrant Certificate shall be void and the Warrants and any rights
represented hereby shall cease unless exercised on or before 5:00 p.m.
Minneapolis time on _________, 2002, unless extended by the Company.
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This Warrant Certificate shall not be valid for any purpose until it
shall have been countersigned by the Warrant Agent.
WITNESS the facsimile signatures of the Company's duly authorized
officers.
HYPERTENSION DIAGNOSTICS, INC.
By____________________________________
Chairman of the Board
By____________________________________
Secretary
COUNTERSIGNED AND REGISTERED:
as Warrant Agent
FIRSTAR TRUST COMPANY
By____________________________________
Authorized Officer
A-3
[REVERSE OF WARRANT CERTIFICATE]
THE CORPORATION WILL FURNISH ANY SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE,
A COPY OF THE ARTICLES OF INCORPORATION AND A FULL STATEMENT OF THE
DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF THE SHARES OF
EACH CLASS OR SERIES AUTHORIZED TO BE ISSUED, SO FAR AS THEY HAVE BEEN
DETERMINED, AND THE AUTHORITY OF THE BOARD TO DETERMINE THE RELATIVE RIGHTS
AND PREFERENCES OF SUBSEQUENT CLASSES OR SERIES.
TO: Hypertension Diagnostics, Inc.
c/o Firstar Trust Company
Warrant Agent
PURCHASE FORM
(To be Executed by the Registered Holder
in Order to Exercise Warrant Certificates)
The undersigned hereby irrevocably elects to exercise _____________* of
the Warrants represented by the Warrant Certificate and to purchase for cash
the Shares issuable upon the exercise of said Warrants and requests that
certificates for such Shares shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF
REGISTERED HOLDER OF CERTIFICATE
------------------------------------------------------------------------------
(Print Name)
------------------------------------------------------------------------------
(Address)
------------------------------------------------------------------------------
Dated: Signature:
------------------------- -------------------------------------
* Insert here the number of Warrants evidenced on the face of this Warrant
Certificate (or, in the case of a partial exercise, the portion thereof being
exercised), in either case without making any adjustment for additional
Common Stock or any other securities or property or cash which, pursuant to
the adjustment provisions referred to in this Warrant Certificate, may be
deliverable upon exercise.
A-4
ASSIGNMENT FORM
(To be Executed by the Registered Holder
in Order to Transfer Warrant Certificates)
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
_____________________ of the Warrants to purchase shares of Common Stock
represented by this Warrant Certificate unto
------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
and does hereby irrevocably constitute and appoint____________________________
Attorney to transfer this Warrant Certificate on the records of the Company with
full power of substitution in the premises.
Dated: Signature(s)
------------------------ -------------------------------
SIGNATURE(S) GUARANTEED:
-----------------------------------
NOTICE
The signature(s) to the Purchase Form or the Assignment Form must
correspond to the name as written upon the face of this Warrant Certificate
in every particular without alteration or enlargement or any change
whatsoever.
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