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EXHIBIT 4.1
THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS
(I) SUCH
SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE
SECURITIES ACT OF 1933,
AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE
144(K), 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
SECURITIES ACT OF 1933 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 MARCH 11, 2010 (the "EXPIRATION
DATE").
No. A-__________
ENDOCARE, INC.
SERIES A WARRANT TO PURCHASE _______ SHARES OF
COMMON STOCK, PAR VALUE $0.001 PER SHARE
For VALUE RECEIVED, ____________________ ("Warrantholder"), is
entitled to
purchase, subject to the provisions of this Warrant, from
Endocare, Inc., a
Delaware corporation ("Company"), at any time not later than
5:00 P.M., Eastern
time, on the Expiration Date (as defined above), at an exercise
price per share
equal to $3.50 (the exercise price in effect being herein called
the "Warrant
Price"), ______ shares ("Warrant Shares") of the Company's
Common Stock, par
value $0.001 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.
Section 1. Registration. The Company shall maintain books for
the transfer
and registration of the Warrant. Upon the initial issuance of
this Warrant, the
Company shall issue and register the 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 thereof 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
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,
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and a new Warrant shall be issued to the transferee and the
surrendered Warrant
shall be canceled by the Company.
Section 3. Exercise of Warrant. Subject to the provisions
hereof, the
Warrantholder may exercise this Warrant in whole or in part at
any time prior to
its expiration upon surrender of the Warrant, together with
delivery of the duly
executed Warrant exercise form attached hereto as Appendix A
(the "Exercise
Agreement") and payment by cash, certified check or wire
transfer of funds (or,
in certain circumstances, by cash-less exercise as provided
below) for 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
evidence of loss,
theft or destruction thereof and security or indemnity
satisfactory 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, representing the aggregate number of shares specified
in the Exercise
Agreement, 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. 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 number
of shares with respect to which this Warrant shall not then have
been exercised.
As used herein, "business day" means a day, other than a
Saturday or Sunday, on
which banks in New York City are open for the general
transaction of business.
Each exercise hereof shall constitute the reaffirmation by the
Warrantholder
that the representations and warranties contained in Section 5
of the Purchase
Agreement (as defined below) are true and correct in all
material respects with
respect to the Warrantholder as of the time of such
exercise.
Section 4. Compliance with the Securities Act of 1933. Except as
provided
in the Purchase Agreement (as defined below), the Company may
cause the legend
set forth on the first page of this Warrant to be set forth on
each Warrant or
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 the 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 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
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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 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 and as
requested by the Company.
Section 7. Reservation of Common Stock. The Company hereby
represents and
warrants that there 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
the 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 outstanding
shares of
Common Stock into a smaller number of shares or issue by
reclassification of its
outstanding shares of Common Stock any shares of its capital
stock (including
any such reclassification in connection with a consolidation or
merger in which
the Company is the continuing corporation), then the number of
Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price
in effect
immediately prior to the date upon which such change shall
become effective,
shall be adjusted by the Company so that the Warrantholder
thereafter exercising
the Warrant shall be entitled to receive the number of shares of
Common Stock or
other capital stock which the Warrantholder would have received
if the Warrant
had been exercised immediately prior to such event upon payment
of a Warrant
Price that has been adjusted to reflect a fair allocation of the
economics of
such event to the Warrantholder. Such adjustments shall be made
successively
whenever any event listed above shall occur.
(b) If any capital reorganization, reclassification of the
capital
stock of the Company, consolidation or merger of the Company
with another
corporation in which the Company is not the survivor, or sale,
transfer or other
disposition of all or substantially all of the Company's assets
to another
corporation shall be effected, then, as a condition of such
reorganization,
reclassification, consolidation, merger, sale, transfer or other
disposition,
lawful and adequate provision shall be made whereby each
Warrantholder shall
thereafter have the right to purchase and receive upon the basis
and upon the
terms and conditions herein specified and in
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lieu of the Warrant Shares immediately theretofore issuable upon
exercise of the
Warrant, such shares of stock, securities or assets as would
have been issuable
or payable with respect to or in exchange for a number of
Warrant Shares equal
to the number of Warrant Shares immediately theretofore issuable
upon exercise
of the Warrant, had such reorganization, reclassification,
consolidation,
merger, sale, transfer or other disposition not taken place, and
in any such
case appropriate provision shall be made with respect to the
rights and
interests of each Warrantholder to the end that the provisions
hereof
(including, without limitation, provision for adjustment of the
Warrant Price)
shall thereafter be applicable, as nearly equivalent as may be
practicable in
relation to any shares of stock, securities or assets thereafter
deliverable
upon the exercise hereof. The Company shall not effect any such
consolidation,
merger, sale, transfer or other disposition unless prior to or
simultaneously
with the consummation thereof the successor corporation (if
other than the
Company) resulting from such consolidation or merger, or the
corporation
purchasing or otherwise acquiring such assets or other
appropriate corporation
or entity shall assume the obligation to deliver to the
Warrantholder, at the
last address of the Warrantholder appearing on the books of the
Company, such
shares of stock, securities or assets as, in accordance with the
foregoing
provisions, the Warrantholder may be entitled to purchase, and
the other
obligations under this Warrant. The provisions of this paragraph
(b) shall
similarly apply to successive reorganizations,
reclassifications,
consolidations, mergers, sales, transfers or other dispositions.
Notwithstanding
the provisions of this paragraph (b), in the event that holders
of Common Stock
receive only cash for their shares of Common Stock as a result
of any such
reorganization, reclassification, consolidation, merger, sale,
transfer or other
disposition, not later than one Business Day after the effective
date of such
reorganization, reclassification, consolidation, merger, sale,
transfer or other
disposition, the Warrantholder shall be entitled to receive in
full satisfaction
of its rights under this Warrant an amount in cash (the
"Spread") equal to (x)
the difference between (A) the per share cash to be received by
holders of
Common Stock in connection with such reorganization,
reclassification,
consolidation, merger, sale, transfer or other disposition and
(B) the Warrant
Price in effect immediately prior to the effective date of such
reorganization,
reclassification, consolidation, merger, sale, transfer or other
disposition,
multiplied by (y) the number of shares of Common Stock for which
this Warrant is
exercisable immediately prior to the effective date of such
reorganization,
reclassification, consolidation, merger, sale, transfer or other
disposition.
Upon payment in full of the Spread to the Warrantholder as
provided above, this
Warrant shall expire and be of no further force and effect. In
the event that
the Spread is not a positive number, no amount shall be payable
to the
Warrantholder as a result of such reorganization,
reclassification,
consolidation, merger, sale, transfer or other disposition, and
this Warrant
shall expire and be of no further force and effect as of the
effective date of
such reorganization, reclassification, consolidation, merger,
sale, transfer or
other disposition.
(c) In case the Company shall fix a payment date for the making
of
a distribution to all holders of Common Stock (including any
such distribution
made in connection with a consolidation or merger in which the
Company is the
continuing corporation) of evidences of indebtedness or assets
(other than cash
dividends or cash distributions payable out of consolidated
earnings or earned
surplus or dividends or distributions referred to in Section
8(a)), or
subscription rights or warrants, the Warrant Price to be in
effect after such
payment date shall be determined by multiplying the Warrant
Price in effect
immediately prior to such payment date by a fraction, the
numerator of which
shall be the total number of shares of Common Stock
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outstanding multiplied by the Market Price (as defined below)
per share of
Common Stock immediately prior to such payment date, less the
fair market value
(as determined by the Company's Board of Directors in good
faith) of said assets
or evidences of indebtedness so distributed, or of such
subscription rights or
warrants, and the denominator of which shall be the total number
of shares of
Common Stock outstanding multiplied by such Market Price per
share of Common
Stock immediately prior to such payment date. "Market Price" as
of a particular
date (the "Valuation Date") shall mean the following: (a) if the
Common Stock is
then listed on a national stock exchange, the closing sale price
of one share of
Common Stock on such exchange on the last trading day prior to
the Valuation
Date; (b) if the Common Stock is then quoted on The Nasdaq Stock
Market, Inc.
("Nasdaq"), the National Association of Securities Dealers, Inc.
OTC Bulletin
Board (the "Bulletin Board"), the "Pink Sheets" or such similar
exchange or
association, the closing sale price of one share of Common Stock
on Nasdaq, the
Bulletin Board or such other exchange or association on the last
trading day
prior to the Valuation Date or, if no such closing sale price is
available, the
average of the high bid and the low asked price quoted thereon
on the last
trading day prior to the Valuation Date; or (c) if the Common
Stock is not then
listed on a national stock exchange or quoted on Nasdaq, the
Bulletin Board, the
Pink Sheets or such other exchange or association, the fair
market value of one
share of Common Stock as of the Valuation Date, shall be
determined in good
faith by the Board of Directors of the Company and the
Warrantholder. If the
Common Stock is not then listed on a national securities
exchange, the Bulletin
Board or such other exchange or association, the Board of
Directors of the
Company shall respond promptly, in writing, to an inquiry by the
Warrantholder
prior to the exercise hereunder as to the fair market value of a
share of Common
Stock as determined by the Board of Directors of the Company. In
the event that
the Board of Directors of the Company and the Warrantholder are
unable to agree
upon the fair market value in respect of subpart (c) hereof, the
Company and the
Warrantholder shall jointly select an appraiser, who is
experienced in such
matters. The decision of such appraiser shall be final and
conclusive, and the
cost of such appraiser shall be borne equally by the Company and
the
Warrantholder. Such adjustment shall be made successively
whenever such a
payment date is fixed.
(d) An adjustment to the Warrant Price shall become
effective
immediately after the payment date in the case of each dividend
or distribution
and immediately after the effective date of each other event
which requires an
adjustment.
(e) In the event that, as a result of an adjustment made
pursuant
to this Section 8, the Warrantholder shall become entitled to
receive any shares
of capital stock of the Company other than shares of Common
Stock, the number of
such other shares so receivable upon exercise of this Warrant
shall be subject
thereafter to adjustment from time to time in a manner and on
terms as nearly
equivalent as practicable to the provisions with respect to the
Warrant Shares
contained in this Warrant.
(f) Except as provided in subsection (g) hereof, if and
whenever
the Company shall issue or sell, or is, in accordance with any
of subsections
(f)(1) through (f)(7) hereof, deemed to have issued or sold, any
shares of
Common Stock for no consideration or for a consideration per
share less than the
Warrant Price in effect immediately prior to the time of such
issue or sale,
then and in each such case (a "Trigger Issuance") the
then-existing Warrant
Price,
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shall be reduced, as of the close of business on the effective
date of the
Trigger Issuance, to a price determined as follows:
Adjusted Warrant Price = (A x B) + D
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A+C
where
"A" equals the number of shares of Common Stock
outstanding or issuable upon conversion or exercise of
outstanding convertible
securities, options, warrants or other rights (whether or not
immediately
convertible or exercisable), plus Additional Shares of Common
Stock (as defined
below) deemed to be issued hereunder, immediately preceding such
Trigger
Issuance;
"B" equals the Warrant Price in effect immediately
preceding such Trigger Issuance;
"C" equals the number of Additional Shares of Common
Stock issued or deemed issued hereunder as a result of the
Trigger Issuance; and
"D" equals the aggregate consideration, if any, received
or deemed to be received by the Company upon such Trigger
Issuance;
provided, however, that in no event shall the Warrant Price
after giving effect
to such Trigger Issuance be greater than the Warrant Price in
effect prior to
such Trigger Issuance.
For purposes of this subsection (f), "Additional Shares of
Common
Stock" shall mean all shares of Common Stock issued by the
Company or deemed to
be issued pursuant to this subsection (f), other than Excluded
Issuance
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