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WARRANT TO PURCHASE SHARES OF COMMON STOCK,

Warrant Agreement

WARRANT TO PURCHASE  SHARES OF

COMMON STOCK, | Document Parties: ENDOCARE, INC You are currently viewing:
This Warrant Agreement involves

ENDOCARE, INC

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Title: WARRANT TO PURCHASE SHARES OF COMMON STOCK,
Governing Law: New York     Date: 3/16/2005
Industry: Medical Equipment and Supplies     Law Firm: Morrison Foerster     Sector: Healthcare

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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

-----------

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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