THIS WARRANT AND THE SECURITIES PURCHASED UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
Warrant to Purchase
____ Shares
Warrant to Purchase Series A Preferred Stock
of
MEDCARE TECHNOLOGIES, INC.
THIS CERTIFIES that _________________ or any subsequent holder hereof
("Holder"), has the right to purchase from MEDCARE TECHNOLOGIES, INC., a
Delaware corporation (the "Company"), up to twenty-five (25) fully paid and
nonassessable shares of the Company's Series A Preferred Stock, $.25 par value
per share ("Preferred Stock"), subject to adjustment as provided herein, which
have the rights and preferences as set forth in the Certificate of Designation
of Series A Preferred Stock of the Company (the "Certificate of Designation"),
at a price equal to the Exercise Price as defined in Section 3 below, at any
time beginning on the Date of Issuance (defined below) and ending at 5:00 p.m.,
blew York, New York time, on June 20, 1998 (the "Exercise Period").
Holder agrees with the Company that this Warrant to Purchase Preferred
Stock of Medcare Technologies, Inc. (this "Warrant") is issued and all rights
hereunder shall be held subject to all of the conditions, limitations and
provisions set forth herein.
1. DATE OF ISSUANCE.
This Warrant shall be deemed to be issued on June 20, 1997 ("Date of
Issuance").
2. EXERCISE.
(a) MANNER OF EXERCISE. During the Exercise Period, this Warrant may be
exercised as to all or any lesser number of full shares of Preferred Stock
covered hereby upon surrender of this Warrant, with the Exercise Form attached
hereto as Exhibit A (the "Exercise Form") duly executed, together with the full
Exercise Price (as defined below) for each share of Preferred Stock as to which
this Warrant is exercised, at the office of the Company, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; Attention: President, Telephone
No. (▇▇▇) ▇▇▇-▇▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇, or at such other office or
agency as the Company may designate in writing, by overnight mail, with an
advance copy of the Exercise Form sent to the Company by facsimile (such
surrender and payment of the Exercise Price hereinafter called the "Exercise of
this Warrant").
(b) DATE OF EXERCISE. The "Date of Exercise" of the Warrant shall be
defined as the date that the advance copy of the Exercise Form is sent by
facsimile to the Company, provided that the original Warrant and Exercise Form
are received by the Company as soon as practicable thereafter. Alternatively,
the Date of Exercise shall be defined as the date the
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original Exercise Form is received by the Company, if Holder has not sent
advance notice by facsimile.
(c) CANCELLATION OF WARRANT. This Warrant shall be canceled upon the
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Preferred Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Preferred Stock.
(d) HOLDER OF RECORD. Each person in whose name any Warrant for shares of
Preferred Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Preferred Stock purchased upon the Exercise of this
Warrant. Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.
(e) CONVERSION PERIOD OF PREFERRED STOCK. Notwithstanding the rights and
preferences of the Preferred Stock set forth in the Certificate of Designation,
Holder hereby agrees to limit conversions of the Preferred Stock obtained upon
exercise of this Warrant into Common Stock to a maximum of twenty percent (20%)
per month of the aggregate number of shares of Preferred Stock issuable upon
full exercise of this Warrant for a period of five (5) months following the Date
of Exercise (the number of shares that may be converted at any given time, in
the aggregate, is referred to hereinafter as the "Preferred Warrant Conversion
Quota"); and provided, further, in the event Holder elects not to convert its
full Preferred Warrant Conversion Quota during any one (1) month period, the
unconverted amount shall he carried forward and added to the Preferred Warrant
Conversion Quota, and thereafter Holder may, from time to time, convert any
portion of the Preferred Warrant Conversion Quota; and provided further, that
subsequent to the date that is five (5) months following the Date of Exercise,
there shall be no restrictions on the number of shares of Preferred Stock
obtained upon exercise of this Warrant that may be converted into Common Stock
other than as set forth in the Certificate of Designation, if applicable.
3. PAYMENT OF WARRANT EXERCISE PRICE.
The Exercise Price shall equal Ten Thousand Dollars ($10,000) per share
("Exercise Price"). Payment of the Exercise Price may be made by cash, certified
check or cashier's check or wire transfer, at the election of Holder.
4. TRANSFER AND REGISTRATION.
(a) TRANSFER RIGHTS. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
endorsed. This Warrant shall be canceled upon such surrender and, as soon as
practicable thereafter, the person to whom such transfer is made shall be
entitled to receive a new Warrant or Warrants as to the portion of this Warrant
transferred, and Holder shall be entitled to receive a new Warrant as to the
portion hereof retained.
(b) REGISTRABLE SECURITIES. The Common Stock issuable upon the conversion
of the Preferred Stock issuable upon the exercise of this Warrant constitutes
"Registrable Securities under that certain Registration Rights Agreement dated
on or about June 20, 1997 between the Company and certain investors and,
accordingly, has the benefit of the registration rights pursuant to that
agreement.
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5. ANTI-DILUTION ADJUSTMENTS. For purposes of this Section 5, the term
"Common Equivalents" shall mean (i) the number of shares of Common Stock issued
or distributed (as applicable) in any event listed in this Section 5, and (ii)
the number of shares of Common Stock into which any security, other than Common
Stock, issued or distributed (as applicable) in any event listed in this Section
5 is convertible or for which such security is exchangeable at any applicable
time during the term of this Warrant.
(a) STOCK DIVIDEND. If the Company shall at any time declare a dividend
payable in Common Equivalents on any class of its capital stock, then Holder,
upon Exercise of this Warrant after the record date for the determination of
shareholders entitled to receive such dividend, shall be entitled to receive
upon Exercise of this Warrant, in addition to the number of Common Equivalents
as to which this Warrant is exercised, such additional shares of Common
Equivalents as such Holder would have received had this Warrant been exercised
immediately prior to such record date and the Exercise Price will be
proportionately adjusted.
(b) RECAPITALIZATION OR RECLASSIFICATION. If the Company shall at any time
effect a recapitalization, reclassification or other similar transaction of such
character that the Common Equivalents shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of Common Equivalents which Holder shall be entitled to
purchase upon Exercise of this Warrant shall be increased or decreased, as the
case may be, in direct proportion to the increase or decrease in the number of
Common Equivalents by reason of such recapitalization, reclassification or
similar transaction, and the Exercise Price shall be, in the case of an increase
in the number of shares, proportionally decreased and, in the case of decrease
in the number of shares, proportionally increased. The Company shall give Holder
the same notice it provides to shareholders of any class of capital stock of any
transaction described in this Section 5(b).
(c) DISTRIBUTIONS. If the Company shall at any time distribute for no
consideration to shareholders of any class of capital stock, cash, evidences of
indebtedness or other securities or assets (other than cash dividends or
distributions payable out of earned surplus or net profits for the current or
preceding year) then, in any such case, Holder shall be entitled to receive,
upon Exercise of this Warrant, with respect to each Common Equivalent issuable
upon such exercise, the amount of cash or evidences of indebtedness or other
securities or assets which Holder would have been entitled to receive with
respect to each such Common Equivalent as a result of the happening of such
event had this Warrant been exercised immediately prior to the record date or
other date fixing shareholders to be affected by such event (the "Determination
Date") or, in lieu thereof, if the Board of Directors of the Company should so
determine at the time of such distribution, a reduced Exercise Price determined
by multiplying the Exercise Price on the Determination Date by a fraction, the
numerator of which is the result of such Exercise Price reduced by the value of
such distribution applicable to one share of Common Stock (such value to be
determined by the Board of Directors of the Company in its discretion) and the
denominator of which is such Exercise Price.
(d) NOTICE OF CONSOLIDATION OR MERGER. In the event of a merger,
consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which capital stock shall be changed into the same
or a different number of shares of the same or another class or classes of stock
or securities or other assets of the Company or another entity or there is a
sale of all or substantially all the Company's assets (a "Corporate Change"),
then this Warrant shall be exercisable into such class and type of securities or
other assets as Holder would have received had Holder exercised this Warrant
immediately prior to such Corporate Change; provided, however, that Company may
not affect any Corporate Change unless it first shall have given thirty (30)
business days notice to Holder hereof of any Corporate Change.
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(e) EXERCISE PRICE ADJUSTED. As used in this Warrant, the term "Exercise
Price" shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in subsection (a), (b) or (c)
of this Section 5, and thereafter shall mean said price as adjusted from time to
time in accordance with the provisions of said subsection. No such adjustment
under this Section 5 shall be made unless such adjustment would change the
Exercise Price at the time by $.01 or more; provided, however, that all
adjustments not so made shall be deferred and made when the aggregate thereof
would change the Exercise Price at the time by $.01 or more. No adjustment made
pursuant to any provision of this Section 5 shall have the net effect of
increasing the Exercise Price. The number of Common Equivalents subject hereto
shall increase proportionately with each decrease in the Exercise Price.
(f) ADJUSTMENTS: ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event that
at any time, as a result of an adjustment made pursuant to this Section 5,
Holder shall, upon Exercise of this Warrant, become entitled to receive shares
and/or other securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.
6. FRACTIONAL INTERESTS.
No fractional shares or scrip representing fractional shares shall be
issuable upon the Exercise of this Warrant, but on Exercise of this Warrant,
Holder may purchase only a whole number of shares of Preferred Stock. If, on
Exercise of this Warrant, Holder would be entitled to a fractional share of
Preferred Stock or a right to acquire a fractional share of Preferred Stock,
such fractional share shall be disregarded and the number of shares of Preferred
Stock issuable upon exercise shall be the next higher number of shares.
7. RESERVATION OF SHARES.
The Company shall at all times reserve for issuance such number of
authorized and unissued shares of Preferred Stock (or other securities
substituted therefor as herein above provided) as shall be sufficient for the
Exercise of this Warrant and such number of shares of Common Stock as shall be
sufficient for the conversion of the Preferred Stock obtainable upon Exercise of
this Warrant. The Company covenants and agrees that upon the Exercise of this
Warrant, all shares of Preferred Stock issuable upon such exercise shall be duly
and validly issued, fully paid, nonassessable and not subject to preemptive
rights, rights of first refusal or similar rights of any person or entity. The
Company covenants and agrees that upon conversion of the Preferred Stock
issuable upon Exercise of this Warrant, all such shares of Common Stock issuable
upon such conversion shall be duly and validly issued, fully paid, nonassessable
and not subject to preemptive rights, rights of first refusal or similar rights
of any person or entity.
8. RESTRICTIONS ON TRANSFER.
(a) REGISTRATION OR EXEMPTION REQUIRED. This Warrant has been issued in a
transaction exempt from the registration requirements of the Act by virtue of
Regulation D and exempt from state registration under applicable state laws. The
Warrant and the Preferred Stock issuable upon the Exercise of this Warrant may
not be sold except pursuant to an effective registration statement or an
exemption to the registration requirements of the Act and applicable state laws.
4
(b) ASSIGNMENT. If Holder can provide the Company with reasonably
satisfactory evidence that the conditions of (a) above regarding registration or
exemption have been satisfied, Holder may sell, transfer, assign, pledge or
otherwise dispose of this Warrant, in whole or in part. Holder shall deliver a
written notice to Company, substantially in the form of the Assignment attached
hereto as Exhibit B. indicating the person or persons to whom the Warrant shall
be assigned and the respective number of warrants to be assigned to each
assignee. The Company shall effect the assignment within ten (10) days, and
shall deliver to the assignee(s) designated by Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of shares.
9. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to confer upon any person other
than the Company and Holder any legal or equitable right, remedy or claim under
this Warrant and this Warrant shall be for the sole and exclusive benefit of the
Company and Holder.
10. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the state of Delaware, without giving
effect to conflict of law provisions thereof.
11. LOSS OF WARRANT.
Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
12. NOTICE OR DEMANDS.
Notices or demands pursuant to this Warrant to be given or made by Holder to or
on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to Attention:
President, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇. Notices or demands
pursuant to this Warrant to be given or made by the Company to or on Holder
shall be sufficiently given or made if sent by certified or registered mail,
return receipt requested, postage prepaid, and addressed, to the address of
Holder set forth in the Company's records, until another address is designated
in writing by Holder.
(INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the undersigned have executed this Warrant as of the
20th day of June, 1997.
COMPANY:
MEDCARE TECHNOLOGIES, INC.
By: _________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
HOLDER:
Holder's Name: _______________
By:___________________________
Print Name:___________________
Title:________________________
6
EXHIBIT A
EXERCISE FORM
TO: MEDCARE TECHNOLOGIES, INC.
The undersigned hereby irrevocably exercises the right to purchase ____ of
the shares of Series A Preferred Stock (the "Preferred Stock") of MEDCARE
TECHNOLOGIES, INC., a Delaware corporation (the "Company"), evidenced by the
attached warrant (the "Warrant"), and herewith makes payment of the exercise
price with respect to such shares in full, all in accordance with the conditions
and provisions of said Warrant.
1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Preferred Stock obtained on exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.
2. The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:
Dated:
--------------------------------------------
Signature
-------------------------------------------
Print Name
--------------------------------------------
Address
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NOTICE
The signature to the foregoing Exercise Form must correspond to the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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-
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EXHIBIT B
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Warrant)
FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
"Warrant") hereby sells, assigns and transfers unto the person or persons below
named the right to purchase __ shares of the Series A Preferred Stock of MEDCARE
TECHNOLOGIES, INC., evidenced by the attached Warrant and does hereby
irrevocably constitute and appoint ________________ attorney to transfer the
said Warrant on the books of the Company, with full power of substitution in the
premises.
Dated: __________________________
Signature
Fill in for new registration of Warrant:
--------------------------------------------
Name
--------------------------------------------
Address
--------------------------------------------
Please print name and address of assignee
(including zip code number)
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NOTICE
The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.
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