THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ ACT ”) AND MAY NOT BE TRANSFERRED
UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE
PURSUANT TO THE ACT, (II) SUCH SECURITIES MAY BE SOLD WITHOUT
RESTRICTION PURSUANT TO RULE 144, OR (III) THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT
SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
ACT OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES
LAWS.
SUBJECT TO THE PROVISIONS OF
SECTION 10 HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00 P.M.
EASTERN TIME ON JANUARY 21, 2016 (THE “ EXPIRATION
DATE ”).
No.[ ]
PET DRX
CORPORATION
WARRANT TO PURCHASE
[_______] SHARES OF
COMMON STOCK, PAR VALUE $0.0001 PER SHARE
For VALUE RECEIVED, [
] (“
Warrantholder ”), is entitled to purchase, subject to
the provisions of this Warrant, from Pet DRx Corporation., a
Delaware corporation (“ Company ”), at any time
from and after the date on which the Stockholder Approval shall
have been obtained (the “ Commencement Date ”);
provided that in any event this Warrant shall be exercisable
immediately prior to and/or in connection with a Change of Control
(as defined in the Notes), and not later than 5:00 P.M., Eastern
time, on the Expiration Date (as defined above), at an exercise
price per share equal to $0.10 (the exercise price in effect being
herein called the “ Warrant Price ”), [
] shares (“
Warrant Shares ”) of the Company’s Common Stock,
par value $0.0001 per share (“ Common Stock ”).
The number of Warrant Shares purchasable upon exercise of this
Warrant and the Warrant Price shall be subject to adjustment from
time to time as described herein. This Warrant is being issued
pursuant to the Purchase Agreement, dated as of January 21,
2009 (the “ Purchase Agreement ”), among the
Company and the initial holders of the Company Warrants (as defined
in Section 20 hereof). Capitalized terms used herein have the
respective meanings ascribed thereto in the Purchase Agreement
unless otherwise defined herein.
Section 1. Registration .
The Company shall maintain books for the transfer and registration
of the Company Warrants. Upon the initial issuance of this Warrant,
the Company shall issue and register this Warrant in the name of
the Warrantholder.
Section 2. Transfers . As
provided herein, this Warrant may be transferred only pursuant to a
registration statement filed under the Securities Act of 1933, as
amended (the “ Securities Act ”), or an
exemption from such registration. Subject to such restrictions, the
Company shall transfer this Warrant from time to time upon the
books to be maintained by the Company for that purpose, upon
surrender hereof for transfer, properly endorsed or accompanied by
appropriate instructions for transfer and such other documents as
may be reasonably required by the Company, including, if required
by the Company, an opinion of its counsel reasonably satisfactory
to the Company to the effect that such transfer is exempt from the
registration requirements of the Securities Act, to establish that
such transfer is being made in accordance with the terms hereof,
and a new Warrant shall be issued to the transferee and the
surrendered Warrant shall be canceled by the Company.
Notwithstanding anything to the contrary contained herein, prior to
January 21, 2010, the Warrants (or, upon the exercise thereof,
the Warrant Shares) shall not be transferable to any Person, other
than to an Investor or an Affiliate thereof and other than to any
Person for estate planning purposes, without the consent of Galen
and Camden, provided that in all events such transfers shall be
made in accordance with the terms hereof and applicable federal and
state securities laws.
Section 3. Exercise of
Warrant . Subject to the provisions hereof, the Warrantholder
may exercise this Warrant, in whole or in part, prior to its
expiration upon surrender of the Warrant, together with delivery of
a duly executed Warrant exercise form, in the form attached hereto
as Appendix A (the “ Exercise Agreement ”)
and payment by cash, certified check or wire transfer of funds (or
by cashless exercise as provided below) of the aggregate Warrant
Price for that number of Warrant Shares then being purchased, to
the Company during normal business hours on any Business Day at the
Company’s principal executive offices (or such other office
or agency of the Company as it may designate by notice to the
Warrantholder). The Warrant Shares so purchased shall be deemed to
be issued to the Warrantholder or the Warrantholder’s
designee, as the record owner of such shares, as of the close of
business on the date on which this Warrant shall have been
surrendered (or the date evidence of loss, theft or destruction
thereof and security or indemnity satisfactory to the Company has
been provided to the Company), the Warrant Price shall have been
paid and the completed Exercise Agreement shall have been
delivered. Certificates for the Warrant Shares so purchased shall
be delivered to the Warrantholder within a reasonable time, not
exceeding three (3) Business Days, after this Warrant shall
have been so exercised. The certificates so delivered shall be in
such denominations as may be requested by the Warrantholder and
shall be registered in the name of the Warrantholder or such other
name as shall be designated by the Warrantholder, as specified in
the Exercise Agreement. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such
certificates, deliver to the Warrantholder a new Warrant
representing the right to purchase the number of shares with
respect to which this Warrant shall not then have been exercised.
Each exercise hereof shall constitute the re-affirmation by the
Warrantholder that the representations and warranties contained in
Section 5.1 of the Purchase Agreement are true and correct in
all material respects with respect to the Warrantholder as of the
time of such exercise.
In the event that a Change of Control
(as defined in the Notes) occurs prior to the Expiration Date, the
Company may elect to redeem as of the effective time of the Change
of Control (the “ Redemption Date ”) this
Warrant at a cash redemption price (the “ Redemption
Price ”) equal to the product of (i) the number of
shares of Common Stock into which this Warrant would have been
exercisable if the Warrant was fully exercisable on the Redemption
Date and (ii) the amount, if any, by which the Fair Market
Value of the consideration per share to be received by holders of
Common Stock in connection with such Change of Control as of the
Redemption Date exceeds the Warrant Price in effect immediately
prior to the effective time of the Change of Control. For purposes
of determining such “Fair Market Value”,
(i) publicly traded securities shall be deemed to have a Fair
Market Value equal to their Market Price, and (ii) any other
securities or other assets shall be deemed to have a Fair Market
Value equal to the fair market value thereof as determined by the
Board in the good faith exercise of its reasonable business
judgment. In the event that the Stockholder Approval has not been
obtained prior to such Change of Control, then the Company shall
redeem this Warrant on the Redemption Date at the Redemption Price.
The Company shall provide written notice to the Warrantholder of
any pending Change of Control not less than 15 days prior to
the effective date of such Change of Control, which notice shall
include the Company’s estimate of the Redemption Price. On
the Redemption Date, the Company shall pay the Redemption Price to
the Warrantholder in immediately available funds to an account
previously specified in writing by the Warrantholder. The
Warrantholder shall not be required to surrender this Warrant prior
to payment of the Redemption Price. Upon the payment in full of the
Redemption Price to the Warrantholder as provided in this
Section 3, this Warrant shall be deemed to have been
extinguished and shall no longer be outstanding for any
purpose.
In the event the Company fails to
obtain the Stockholder Approval on or before October 31, 2009,
then upon any repayment to any holder of the Notes pursuant to
Section 3(c) thereof, the Company shall redeem this Warrant, at the
Warrantholder’s election, at a cash redemption price equal to
the Default Redemption Price defined below. The “ Default
Redemption Price ” shall equal (i) minus
(ii) where (i) equals the product of (A) the number
of shares of Common Stock into which this Warrant would have been
exercisable if this Warrant was fully exercisable on the repayment
date and (B) the average of the Market Prices of the Common
Stock for the five (5) Trading Days ending on October 31,
2009, and (ii) equals the Warrant Price in effect immediately
prior to the repayment date. Notwithstanding the foregoing, the
Company shall not be required to redeem this Warrant pursuant to
this Section 3 unless (i) each of the Investors (as
defined in the Purchase Agreement) has fulfilled its obligations
pursuant to the voting agreement obligations under Section 5.2
of the Purchase Agreement and (ii) the Warrantholder certifies
in its election notice that during the ten (10) Trading Days
(x) ending on October 31, 2009 or (y) prior to the
repayment date for this Warrant, as the case may be, neither it nor
its Affiliates has directly or indirectly engaged in any
transaction that would be reported as a purchase on Form 4
under the 1934 Act (whether or not the Warrantholder is then
subject to Section 16 under the 1934 Act), or participating in
any arrangement or understanding with any other Person.
Immediately upon the repayment of the
Notes following an Event of Default under the Notes (as defined
therein) prior to the receipt by the Company of the Stockholder
Approval, the Company shall redeem this Warrant, at the
Warrantholder’s election, unless the Company shall have
notified the Warrantholder at the time the Notes are repaid, that
it may immediately exercise this Warrant (regardless of whether the
Commencement Date has occurred), at a cash redemption price equal
to the Default Redemption Price.
The Company shall have the right, at
its option, to redeem at any such time of its choosing (the “
Optional Redemption Date ”) this Warrant at a cash
redemption price (the “ Optional Redemption Price
”) equal to (i) the product of (A) twelve and
one-half (12.5) and (B) the applicable Warrant Price less
(ii) the Warrant Price. The Company shall provide ten
(10) days’ written notice to the Warrantholder prior to
the Optional Redemption Date, which notice shall include the
Company’s estimate of the Optional Redemption Price and a
representation that the Company has sufficient cash on hand or
committed to pay the Optional Redemption Price on the Optional
Redemption Date. On the Optional Redemption Date, the Company shall
pay the Optional Redemption Price to the Warrantholder in
immediately available funds to an account previously specified in
writing by the Warrantholder. The Warrantholder shall not be
required to surrender this Warrant prior to payment of the Optional
Redemption Price. Upon the payment in full of the Optional
Redemption Price to the Warrantholder as provided in this
Section 3, this Warrant shall be deemed to have been
extinguished and shall no longer be outstanding for any
purpose.
Section 4. Compliance with
the Securities Act of 1933 . Except as provided in the Purchase
Agreement, the Company may cause the legend set forth on the first
page of this Warrant to be set forth on each Company Warrant, and a
similar legend on any security issued or issuable upon exercise of
this Warrant, unless counsel for the Company is of the opinion as
to any such security that such legend is unnecessary.
Section 5. Payment of
Taxes . The Company will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable
upon the exercise of this Warrant; provided, however, that the
Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issuance or
delivery of any certificates for Warrant Shares in a name other
than that of the Warrantholder in respect of which such shares are
issued, and in such case, the Company shall not be required to
issue or deliver any certificate for Warrant Shares or any Company
Warrant until the person requesting the same has paid to the
Company the amount of such tax or has established to the
Company’s reasonable satisfaction that such tax has been
paid. The Warrantholder shall be responsible for income taxes due
under federal, state or other law, if any such tax is due.
Section 6. Mutilated or
Missing Warrants . In case this Warrant shall be mutilated,
lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon surrender and cancellation of the
mutilated Warrant, or in lieu of and substitution for the Warrant
lost, stolen or destroyed, a new Warrant of like tenor and for the
purchase of a like number of Warrant Shares, but only upon receipt
of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost,
stolen or destroyed Warrant, reasonable indemnity or bond with
respect thereto, if requested by the Company.
Section 7. Reservation of
Common Stock . The Company hereby represents and warrants that,
from and after the date of the receipt of the Stockholder Approval,
there will have been reserved, and the Company shall at all
applicable times keep reserved until issued (if necessary) as
contemplated by this Section 7, out of the authorized and
unissued shares of Common Stock, sufficient shares to provide for
the exercise of the rights of purchase represented by this Warrant.
The Company agrees that all Warrant Shares issued upon due exercise
of this Warrant shall be, at the time of delivery of the
certificates for such Warrant Shares, duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock of the
Company.
Section 8. Adjustments .
Subject and pursuant to the provisions of this Section 8, the
Warrant Price and number of Warrant Shares subject to this Warrant
shall be subject to adjustment from time to time as set forth
hereinafter.
(a) If the Company shall, at
any time or from time to time while this Warrant is outstanding,
pay a dividend or make a distribution on its Common Stock in shares
of Common Stock, subdivide its outstanding shares of Common Stock
into a greater number of shares or combine its ou
