Warrant
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933 (THE "ACT") OR
APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS") AND SHALL NOT BE SOLD,
PLEDGED, HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
CONSIDERATION) BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE COMPANY OF A
FAVORABLE OPINION OF COUNSEL OR SUBMISSION TO THE COMPANY OF SUCH EVIDENCE AS
MAY BE SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE EFFECT
THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT AND THE STATE ACTS.
WARRANT TO PURCHASE _________ (______) SHARES OF COMMON STOCK
INNOVATIVE MEDICAL SERVICES
(a California Corporation)
Not Transferable or Exercisable Except
upon Conditions Herein Specified
Void after 5:00 P.M.,
Pacific Standard Time, on the March 31, 2001
Innovative Medical Services, a California corporation (the "Company")
hereby certifies that, ___________, as the registered holder hereof (the
"Holder"), for value received, is entitled to purchase from the Company the
number of fully paid and non-assessable shares of Common Stock of the Company
(the "Shares"), stated above at the purchase price of $5.25 per Share (the
"Exercise Price") (the number of Shares and Exercise Price being subject to
adjustment as hereinafter provided) upon the terms and conditions herein
provided. 1. Exercise of Warrants.
(a) Subject to subsection (b) of this Section 1 and Section 11 below, upon
presentation and surrender of this Warrant Certificate, with the attached
Purchase Form duly executed, at the principal office of the Company at 0000
Xxxxxxxxx Xxx, Xx Xxxxx, Xxxxxxxxxx 00000 or at such other place as the Company
may designate by notice to the Holder hereof, together with a certified or bank
cashier's check payable to the order of the Company in the amount of the
Exercise Price times the number of Shares being purchased, the Company shall
deliver to the Holder hereof, as promptly as practicable, certificates
representing the Shares being purchased. This Warrant may be exercised in whole
or in part; and, in case of exercise hereof in part only, the Company, upon
surrender hereof, will deliver to the Holder a new Warrant Certificate or
Warrant Certificates of like tenor entitling the Holder to purchase the number
of Shares as to which this Warrant has not been exercised.
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(b) This Warrant may be exercised in whole or in part at any time prior to
5:00 o'clock P.M., Pacific Standard Time, on March 31, 2001.
2. Exchange and Transfer of Warrant. This Warrant (a) at any time prior to
the exercise hereof, upon presentation and surrender to the Company, may be
exchanged, alone or with other Warrants of like tenor registered in the name of
the Holder, for another Warrant or other Warrants of like tenor in the name of
such Holder exercisable for the same aggregate number of Shares as the Warrant
or Warrants surrendered, (b) may not be sold, transferred, hypothecated, or
assigned, in whole or in part, without the prior written consent of the Company.
3. Rights and Obligations of Warrant Holder.
(a) The Holder of this Warrant Certificate shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or in
equity; provided, however, in the event that any certificate representing the
Shares is issued to the Holder hereof upon exercise of this Warrant, such Holder
shall, for all purposes, be deemed to have become the holder of record of such
Shares on the date on which this Warrant Certificate, together with a duly
executed Purchase Form, was surrendered and payment of the Exercise Price was
made, irrespective of the date of delivery of such Share certificate. The rights
of the Holder of this Warrant are limited to those expressed herein and the
Holder of this Warrant, by its acceptance hereof, consents to and agrees to be
bound by and to comply with all the provisions of this Warrant Certificate,
including, without limitation, all the obligations imposed upon the Holder
hereof by Sections 2 and 5 hereof. In addition, the Holder of this Warrant
Certificate, by accepting the same, agrees that the Company may deem and treat
the person in whose name this Warrant Certificate is registered on the books of
the Company maintained for such purpose as the absolute, true and lawful owner
for all purposes whatsoever, notwithstanding any notation of ownership or other
writing thereon, and the Company shall not be affected by any notice to the
contrary.
(b) No Holder of this Warrant Certificate, as such, shall be
entitled to vote or receive distributions or to be deemed the holder of Shares
for any purpose, nor shall anything contained in this Warrant Certificate be
construed to confer upon any Holder of this Warrant Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any action by the Company, whether upon any
recapitalization, issue of stock, reclassification of stock, merger, conveyance
or otherwise, receive notice of meetings or other action affecting stockholders
(except for notices provided for herein), receive distributions, subscription
rights, or otherwise, until this Warrant shall have been exercised and the
Shares purchasable upon the exercise thereof shall have become deliverable as
provided herein; provided, however, that any such exercise on any date when the
stock transfer books of the Company shall be closed shall constitute the person
or persons in whose name or names the certificate or certificates for those
Shares are to be issued as the record holder or holders thereof for all purposes
at the opening of business on the next succeeding day on which such stock
transfer books are open, and the Warrant surrendered shall not be deemed to have
been exercised, in whole or in part as the case may be, until the next
succeeding day on which stock transfer books are open for the purpose of
determining
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entitlement to distributions on the Company's common stock.
4. Shares Underlying Warrants. The Company covenants and agrees that
all Shares delivered upon exercise of this Warrant shall, upon delivery and
payment therefor, be duly and validly authorized and issued, fully-paid and
non-assessable, and free from all stamp taxes, liens, and charges with respect
to the purchase thereof In addition, the Company agrees at all times to reserve
and keep available an authorized number of Shares sufficient to permit the
exercise in full of this Warrant.
5. Disposition of Warrants or Shares.
(a) The holder of this Warrant Certificate and any transferee
hereof or of the Shares issuable upon the exercise of the Warrant Certificate,
by their acceptance hereof, hereby understand and agree that the Warrant, and
the Shares issuable upon the exercise hereof, have not been registered under
either the Securities Act of 1933 (the "Act") or applicable state securities
laws (the "State Acts") and shall not be sold, pledged, hypothecated, donated,
or otherwise transferred (whether or not for consideration) except upon the
issuance to the Company of a favorable opinion of counsel or submission to the
Company of such evidence as may be satisfactory to counsel to the Company, in
each such case, to the effect that any such transfer shall not be in violation
of the Act and the State Acts. It shall be a condition to the transfer of this
Warrant that any transferee thereof deliver to the Company its written agreement
to accept and be bound by all of the terms and conditions of this Warrant
Certificate.
(b) Unless and until there is an effective registration
statement filed with the U.S. Securities and Exchange Commission for the Common
Stock underlying the Warrant, the stock certificates of the Company that will
evidence the shares of Common Stock with respect to which this Warrant may be
exercisable will be imprinted with conspicuous legend in substantially the
following form:
"The securities represented by this certificate have
not been registered under either the Securities Act of 1933 (the "Act")
or applicable state securities laws (the "State Acts") and shall not be
sold, pledged, hypothecated, donated or otherwise transferred (whether
or not for consideration) by the holder except upon the issuance to the
Company of a favorable opinion of its counsel or submission to the
company of such other evidence as may be satisfactory to counsel of the
Company, in each such case, to the effect that any such transfer shall
not be in violation of the Act and the State Acts."
The Company has agreed to register the Common Stock with respect to which this
Warrant may be exercisable for distribution in accordance with the provisions of
the Act pursuant to a registration statement to be filed with the U.S.
Securities and Exchange Commission on or before April 28, 2000.
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6. Adjustments. The number of Shares purchasable upon the exercise of
each Warrant is subject to adjustment from time to time upon the occurrence of
any of the events enumerated below.
(a) In case the Company shall: (i) pay a dividend in Shares,
(ii) subdivide its outstanding Shares into a greater number of Shares, (iii)
combine its outstanding Shares into a smaller number of Shares, or (iv) issue,
by reclassification of its Shares, any shares of its capital stock, the amount
of Shares purchasable upon the exercise of each Warrant immediately prior
thereto shall be adjusted so that the Holder shall be entitled to receive upon
exercise of the Warrant that number of Shares which such Holder would have owned
or would have been entitled to receive after the happening of such event had
such Holder exercised the Warrant immediately prior to the record date, in the
case of such dividend, or the effective date, in the case of any such
subdivision, combination or reclassification. An adjustment made pursuant to
this subsection (a) shall be made whenever any of such events shall occur, but
shall become effective retroactively after such record date or such effective
date, as the case may be, as to Warrants exercised between such record date or
effective date and the date of happening of any such event.
(b) In case the Company shall issue rights or warrants to all
holders of its Shares entitling them to subscribe for or to purchase Shares at a
price per Share which, when added to the amount of consideration received or
receivable by the Company for such rights or warrants, is less than the Current
Market Price (as hereinafter defined) per Share at the record date, the number
of Shares purchasable upon the exercise of this Warrant shall be adjusted so
that thereafter, until further adjusted, each Warrant shall entitle the Holder
to purchase that number of Shares determined by multiplying the number of Shares
purchasable hereunder by a fraction, the numerator of which shall be the number
of additional Shares issuable upon the exercise of such rights or warrants, and
the denominator of which shall be the number of Shares which an amount equal to
the sum of (i) the aggregate exercise price of the total number of Shares
issuable upon the exercise of such rights or warrants, and (ii) the aggregate
amount of consideration, if any, received, or receivable by the Company for such
rights or warrants, would purchase at such Current Market Price. Such adjustment
shall be made whenever such rights or warrants are issued, but shall also be
effective retroactively as to Warrants exercised between the record date for the
determination of stockholders entitled to receive such rights or warrants and
the date such rights or warrants are issued.
(c) For the purpose of any computation under subsection (b)
above, the Current Market Price per Share at any date shall be: (i) if the
Shares are listed on any national securities exchange, the average of the daily
closing prices for the 15 consecutive business days commencing 20 business days
before the day in question (the "Trading Period"); (ii) if the Shares are not
listed on any national securities exchange but are quoted on the Nasdaq SmallCap
Market, the average of the high and low bids as reported by NASDAQ for the
Trading Period; and (iii) if the Shares are neither listed on any national
securities exchange nor quoted on NASDAQ, the higher of (x) the exercise price
then in effect, or (y) the tangible book value per Share as of the end of the
Company's immediately preceding fiscal year.
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(d) No adjustment shall be required unless such adjustment
would require an increase or decrease of at least 1% in the number of Shares
purchasable hereunder; provided, however, that any adjustments which by reason
of this subsection (d) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 6 shall be made to the nearest one-hundredth of a Share.
(e) No adjustment shall be made in any of the following cases:
(i) Upon the grant or exercise of stock options now
or hereafter granted, or under any employee stock option or stock purchase plan
now or hereafter authorized, to the extent that the aggregate of the number of
Shares which may be purchased under such options and the number of Shares issued
under such employee stock purchase plan is less than or equal to 10% of the
number of Shares outstanding on January 1 of the year of the grant or exercise;
(ii) Shares issued upon the conversion of any of the
Company's convertible or exchangeable securities;
(iii) Shares issued in connection with the
acquisition by the Company or by any subsidiary of the Company of 80% or more of
the assets of another corporation or entity, and Shares issued in connection
with the acquisition by the Company or by any subsidiary of the Company of 80%
or more of the voting shares of another corporation (including Shares issued in
connection with such acquisition of voting shares of such other corporation
subsequent to the acquisition of an aggregate
of 80% of such voting shares), Shares issued in a merger of the Company or a
subsidiary of the Company with another corporation in which the Company or the
Company's subsidiary is the surviving corporation, and Shares issued upon the
conversion of other securities issued in connection with any such acquisition or
in any such merger; and
(iv) Shares issued pursuant to this Warrant and
pursuant to all stock options and warrants outstanding on the date hereof.
(f) Notice to Warrant Holders of Adjustment. Whenever the
number of Shares purchasable hereunder is adjusted as herein provided, the
Company shall cause to be mailed to the Holder in accordance with the provisions
of this Section 6 a notice (i) stating that the number of Shares purchasable
upon exercise of this Warrant have been adjusted, (ii) setting forth the
adjusted number of Shares purchasable upon the exercise of a Warrant, and (iii)
showing in reasonable detail the computations and the facts, including the
amount of consideration received or deemed to have been received by the Company,
upon which such adjustments are based.
7. Fractional Shares. The Company shall not be required to issue any
fraction of a Share upon the exercise of Warrants. If more than one Warrant
shall be surrendered for exercise at one time by the same Holder, the number of
full Shares which shall be issuable upon exercise thereof
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shall be computed on the basis of the aggregate number of Shares with respect to
which this Warrant is exercised. If any fractional interest in a Share shall be
deliverable upon the exercise of this Warrant, the Company shall make an
adjustment therefor in cash equal to such fraction multiplied by the Current
Market Price of the Shares on the business day next preceding the day of
exercise.
8. Loss or Destruction. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant
Certificate and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement or bond satisfactory in form, substance and
amount to the Company or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant Certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new Warrant Certificate of like tenor.
9. Survival. The various rights and obligations of the Holder hereof as
set forth herein shall survive the exercise of the Warrants represented hereby
and the surrender of this Warrant Certificate.
10. Notices. Whenever any notice, payment of any purchase price, or
other communication is required to be given or delivered under the terms of this
Warrant, it shall be in writing and delivered by hand delivery or United States
registered or certified mail, return receipt requested, postage prepaid, and
will be deemed to have been given or delivered on the date such notice, purchase
price or other communication is so delivered or posted, as the case may be; and,
if to the Company, it will be addressed to the address specified in Section 1
hereof, and if to the Holder, it will be addressed to the registered Holder at
its, his or her address as it appears on the books of the Company.
11. Redemption of Warrants. This Warrant may be redeemed by the Company
upon thirty days written notice to the Holder for $0.05 per Warrant Share
provided that the closing bid price for the Company's common stock as reported
by its trading market has been not less than $4.00 per share for twenty
consecutive trading days. Unless this Warrant has been exercised pursuant to
Section 1 on or before the thirtieth day following the date of the written
notice, this Warrant shall be null and void save only the Company's obligation
to pay the redemption amount.
INNOVATIVE MEDICAL SERVICES
By:
Xxxxxxx X. Xxxxx, President
March 31, 2000
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PURCHASE FORM
DATE:
TO: INNOVATIVE MEDICAL SERVICES
The undersigned hereby irrevocably elects to exercise the attached
Warrant Certificate to the extent of ____ shares of the Common Stock, of
INNOVATIVE MEDICAL SERVICES and hereby makes payment of $_______ ($5.25 x # OF
WARRANTS EXERCISED) in accordance with the provisions of Section 1 of the
Warrant Certificate in payment of the purchase price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name: ---------------------------------------------------
Please typewrite or print in block letters)
Address: --------------------------------------------------
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By: --------------------------
Signature of Record Holder
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