EXHIBIT 10.2

 

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON THE EXERCISE HEREOF
(COLLECTIVELY, THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT UNDER THE ACT WITH RESPECT TO THE SECURITIES OR DELIVERY TO THE
COMPANY OF AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
COMPANY THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE WITH THE ACT OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144 UNDER
THE ACT.

 

WARRANT TO PURCHASE COMMON STOCK

 

OF

 

DIGIRAD CORPORATION

 

Date of Issuance – August 9, 2004

 

Void after June 16, 2008

 

Digirad Corporation, a Delaware corporation (the “Company”), hereby certifies
that, for value received                                   (including any
successors and assigns, the “Holder”), is entitled, subject to the terms set
forth below, to purchase from the Company at any time or from time to time,
before 5:00 PM, Pacific time on June 16, 2008 (the “Expiration Date”) up to
              shares of Common Stock of the Company (the “Warrant Shares”),
subject to adjustment as provided herein.  The purchase price per share of such
Common Stock upon exercise of this Warrant shall be $12.00 (the “Exercise
Price”), subject to adjustment as provided herein.  This Warrant is issued to
the Holder in connection with and subject to the terms and conditions of that
certain Loan Modification and Warrant Issuance Agreement dated August 9, 2004,
by and among the Company, Holder and/or his, her or its assignor and the other
parties thereto (the “Loan Modification Agreement”).

 

1.                                       Exercise Period.  Subject to Section
2.2 herein, this Warrant may be exercised by the Holder at any time or from time
to time after the Date of Issuance noted above but before 5:00 PM, Pacific time
on the Expiration Date (the “Exercise Period”).

 

2.                                       Exercise of Warrant; Number of Warrant
Shares; Termination. 

 

2.1                                 Exercise of Warrant; Partial Exercise.  This
Warrant may be exercised in full or in part by the Holder with respect to any or
all of the Warrant Shares by surrender of this Warrant, together with the form
of subscription attached hereto as Schedule 1, duly executed by the Holder, to
the Company at its principal office, accompanied by payment, in cash or by
certified or official bank check payable to the order of the Company, of the
aggregate Exercise Price for the Warrant Shares to be purchased hereunder.  For
any partial exercise hereof, the Holder shall designate in a notice of exercise
or net issue election notice that number of shares of Common Stock that he, she
or it wishes to purchase.  On any such partial exercise, the Company at its
expense shall forthwith issue and deliver to the Holder a new warrant of like
tenor, in the

 

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name of the Holder, which shall be exercisable for such number of shares of
Common Stock represented by this Warrant which have not been purchased upon such
exercise. 

 

2.2                                 Termination of the Warrant Upon a Corporate
Transaction.  Immediately following the occurrence of a Corporate Transaction,
this Warrant shall terminate and cease to be outstanding, provided that written
notice has been given to the Holder at least 20 days prior to the occurrence of
the Corporate Transaction.  For the purposes of this Warrant, a “Corporate
Transaction” shall mean: (i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting power of
the Company’s outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
transaction; or (ii) the sale, transfer or other disposition of all or
substantially all of the Company’s assets in complete liquidation or dissolution
of the Company.

 

3.                                       Net Issuance.

 

3.1                                 Right to Convert.  The Holder shall have the
right to convert this Warrant or any portion thereof (the “Conversion Right”)
into shares of Common Stock as provided in this Section 3 at any time or from
time to time during the Exercise Period.  Upon exercise of the Conversion Right
with respect to a particular number of Warrant Shares (the “Converted Warrant
Shares”), the Company shall deliver to the Holder (without payment by the Holder
of any exercise price or any cash or other consideration) that number of shares
of fully paid and nonassessable shares of Common Stock computed using the
following formula:

 

X = Y (A - B)

A

 

Where

X =

the number of shares of Common Stock to be delivered to the Holder

 

 

 

 

Y =

the number of Converted Warrant Shares

 

 

 

 

A =

the fair market value of one share of the Company’s Common Stock on the
Conversion Date (as defined below)

 

 

 

 

B =

the Exercise Price (as adjusted through the Conversion Date)

 

The Conversion Right may only be exercised with respect to a whole number of
Warrant Shares.  No fractional shares shall be issuable upon exercise of the
Conversion Right, and if the number of shares to be issued determined in
accordance with the foregoing formula is other than a whole number, the Company
shall pay to the Holder an amount in cash equal to the fair market value of the
resulting fractional share on the Conversion Date (as defined below).  Shares
issued pursuant to the Conversion Right shall be treated as if they were issued
upon the exercise of this Warrant.

 

3.2                                 Method of Exercise.  The Conversion Right
may be exercised by the Holder by the surrender of this Warrant at the principal
office of the Company together with a written statement specifying that the
Holder thereby intends to exercise the Conversion Right and indicating the total
number of shares under this Warrant that the Holder is exercising through the
Conversion Right.  Such conversion shall be effective upon receipt by the
Company of this Warrant together with the aforesaid written statement, or on
such later date as is specified therein

 

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(the “Conversion Date”) and at such time the person in whose name any
certificate for shares of Common Stock shall be issuable upon such exercise
shall be deemed to be the record holder of such Common Stock for all purposes. 
Certificates for the shares issuable upon exercise of the Conversion Right and,
if applicable, a new warrant evidencing the balance of the shares remaining
subject to the Warrant, shall be issued as of the Conversion Date and shall be
delivered to the Holder promptly following the Conversion Date.

 

3.3                                 Determination of Fair Market Value.  For
purposes of this Section 3, fair market value of a share of Common Stock on the
Conversion Date shall mean:

 

(1)                                  If traded on a stock exchange, the fair
market value of the Common Stock shall be deemed to be the average of the
closing selling prices of the Common Stock on the stock exchange determined by
the Board of Directors of the Company (the ”Board”) to be the primary market for
the Common Stock over the ten (10) trading day period (or such shorter period
immediately following the closing of the Company’s initial public offering)
ending on the date prior to the Conversion Date, as such prices are officially
quoted in the composite tape of transactions on such exchange;

 

(2)                                  If traded over-the-counter, the fair market
value of the Common Stock shall be deemed to be the average of the closing bid
prices (or, if such information is available, the closing selling prices) of the
Common Stock over the ten (10) trading day period (or such shorter period
immediately following the closing of the Company’s initial public offering)
ending on the date prior to the Conversion Date, as such prices are reported by
the National Association of Securities Dealers through its NASDAQ system or any
successor system; and

 

(3)                                  If there is no public market for the Common
Stock, the fair market value of the Common Stock shall be determined in good
faith by the Board.

 

4.                                       When Exercise Effective.  The exercise
of this Warrant pursuant to Section 2 shall be deemed to have been effected
immediately prior to the close of business on the business day on which this
Warrant is surrendered to the Company as provided in Section 2.1, or on such
later date as is specified in the form of subscription, and at such time the
person in whose name any certificate for shares of Common Stock shall be
issuable upon such exercise, as provided in Section 5, shall be deemed to be the
record holder of such Common Stock for all purposes.

 

5.                                       Delivery on Exercise.  As soon as
practicable after the exercise of this Warrant in full or in part pursuant to
Section 2, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the Holder, or as the Holder may direct, a certificate or certificates for the
number of fully paid and nonassessable full shares of Common Stock to which the
Holder shall be entitled on such exercise, together with cash, in lieu of any
fraction of a share, equal to such fraction of the current market value of one
full share of Common Stock as determined pursuant to Section 3.3.

 

6.                                       Adjustments.  The number and kind of
shares of Common Stock (or any shares of stock or other securities which may be)
issuable upon the exercise of this Warrant and the

 

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Exercise Price shall be subject to adjustment from time to time upon the
happening of certain events, as follows:

 

6.1                                 Dividends, Distributions, Stock Splits or
Combinations.  If the Company shall at any time or from time to time after the
date hereof (a) make or issue, or fix a record date for the determination of
holders of Common Stock (or any shares of stock or other securities which may be
issuable upon the exercise of this Warrant) entitled to receive, a dividend or
other distribution payable in additional shares of common or preferred stock (as
the case may be), (b) subdivide its outstanding shares of Common Stock (or any
shares of stock or other securities which may be issuable upon the exercise of
this Warrant) into a larger number of shares of Common Stock (or any shares of
stock or other securities which may be issuable upon the exercise of this
Warrant) or (c) combine its outstanding shares of Common Stock (or any shares of
stock or other securities which may be issuable upon the exercise of this
Warrant) into a smaller number of shares of Common Stock (or any shares of stock
or other securities which may be issuable upon the exercise of this Warrant),
then and in each such event the Exercise Price then in effect and the number of
shares issuable upon exercise of this Warrant shall be appropriately adjusted.

 

6.2                                 Reclassification or Reorganization.  If the
Common Stock (or any shares of stock or other securities which may be) issuable
upon the exercise of this Warrant shall be changed into the same or different
number of shares of any class or classes of stock, whether by capital
reorganization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend provided for in Section 6.1 above, or
pursuant to a Corporate Transaction), then and in each such event the Holder
shall be entitled to receive upon the exercise of this Warrant the kind and
amount of shares of stock and other securities and property receivable upon such
reorganization, reclassification or other change to which a holder of the number
of shares of Common Stock (or any shares of stock or other securities which may
be) issuable upon the exercise of this Warrant would have received if this
Warrant had been exercised immediately prior to such reorganization,
reclassification or other change, all subject to further adjustment as provided
herein.

 

6.3                                 Notice of Adjustments and Record Dates.  The
Company shall promptly notify the Holder in writing of each adjustment or
readjustment of the Exercise Price and the number of shares of Common Stock (or
any shares of stock or other securities which may be) issuable upon the exercise
of this Warrant.  Such notice shall state the adjustment or readjustment and
show in reasonable detail the facts on which that adjustment or readjustment is
based.  In the event of any taking by the Company of a record of the holders of
Common Stock (or any shares of stock or other securities which may be issuable
upon the exercise of this Warrant) for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution, the
Company shall notify Holder in writing of such record date at least twenty (20)
days prior to the date specified therein.

 

6.4                                 When Adjustments To Be Made.  No adjustment
in the Exercise Price shall be required by this Section 6 if such adjustment
either by itself or with other adjustments not previously made would require an
increase or decrease of less than one percent (1%) in such price.  Any
adjustment representing a change of less than such minimum amount which is
postponed shall be carried forward and made as soon as such adjustment, together
with other

 

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adjustments required by this Section 6 and not previously made, would result in
a minimum adjustment.  Notwithstanding the foregoing, any adjustment carried
forward shall be made no later than ten (10) business days prior to the
Expiration Date.  All calculations under this Section 6.4 shall be made to the
nearest cent.  For the purpose of any adjustment, any specified event shall be
deemed to have occurred at the close of business on the date of its occurrence.

 

6.5                                 Certain Other Events.  If any change in the
outstanding Common Stock (or any shares of stock or other securities which may
be issuable upon the exercise of this Warrant) or any other event occurs as to
which the other provisions of this Section 6 are not strictly applicable or if
strictly applicable would not fairly protect the purchase rights of the Holder
of the Warrant in accordance with such provisions, then the Board shall make an
adjustment in the number and class of shares available under this Warrant, the
Exercise Price or the application of such provisions, so as to protect such
purchase rights as aforesaid.  The adjustment shall be such as will give the
Holder, upon exercise of this Warrant, the same aggregate Exercise Price and the
same total number, class and kind of shares as the Holder would have owned had
this Warrant been exercised prior to the event and had the Holder continued to
hold such shares until after the event requiring adjustment.

 

7.                                       Replacement of Warrants.  On receipt by
the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Warrant and, in the case of any such
loss, theft or destruction of this Warrant, on delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of such Warrant, the
Company at its expense will execute and deliver to the Holder, in lieu thereof,
a new warrant of like tenor.

 

8.                                       No Rights or Liability as a
Stockholder.  This Warrant does not entitle the Holder hereof to any voting
rights or other rights as a stockholder of the Company.  No provisions hereof,
in the absence of affirmative action by the Holder to purchase Common Stock, and
no enumeration herein of the rights or privileges of the Holder, shall give rise
to any liability of the Holder as a stockholder of the Company.

 

9.                                       Representations of Holder.

 

The Holder hereby represents, covenants and acknowledges to the Company that:

 

(1)                                  this Warrant and the Warrant Shares are
“restricted securities” as such term is used in the rules and regulations under
the Securities Act of 1933, as amended (the “Act”) and that this Warrant and the
Warrant Shares have not been registered under the Act and the Company has no
present intention of registering the Securities under the Act or any state
securities law, and that this Warrant and the Warrant Shares must be held
indefinitely unless a transfer can be made pursuant to appropriate exemptions
(including, without limitation, pursuant to Rule 144 under the Act);

 

(2)                                  the Holder has read, and fully understands,
the terms of this Warrant set forth on its face and the attachments hereto,
including the restrictions on transfer contained herein;

 

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(3)                                  the Holder is purchasing for investment for
his, her or its own account and not with a view to or for sale in connection
with any distribution of this Warrant or the Warrant Shares and he, she or it
has no intention of selling such securities in a public distribution in
violation of the federal securities laws or any applicable state securities
laws; and

 

(4)                                  the Holder (i) has received all information
the Holder has requested from the Company and considers necessary or appropriate
for deciding whether to acquire this Warrant and the Warrant Shares, (ii) has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of this Warrant and the Warrant Shares and to
obtain any additional information necessary to verify the accuracy of the
information given to the Holder, and (iii) has such knowledge and experience in
financial and business matters such that the Holder is capable of evaluating the
merits and risks of the investment in this Warrant and the Warrant Shares.

 

10.                                 Market Stand-Off Agreement.  The Holder
hereby agrees that, during the period of duration specified by the Company and
an underwriter of Common Stock or other securities of the Company, following the
effective date of a registration statement of the Company filed under the Act,
he, she or it shall not, to the extent requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the Company held by it at any time during such period
except Common Stock included in such registration; provided, however, that:

 

(1)                                  Such agreement shall not exceed 180 days
for the first such registration statement of the Company which covers Common
Stock (or other securities) to be sold on its behalf to the public in an
underwritten offering;

 

(2)                                  Such agreement shall not exceed ninety (90)
days for any subsequent registration statement of the Company which covers
Common Stock (or other securities) to be sold on its behalf to the public in an
underwritten offering; and

 

(3)                                  All directors and officers of the Company
as well as all holders of one percent (1%) or more of the Company’s outstanding
capital stock are similarly bound.

 

In order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to securities held by the Holder (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such period.

 

11.                                 Miscellaneous.

 

11.1                           Transfer of Warrant.  This Warrant shall not be
transferable or assignable by the Holder without the express written consent of
the Company.

 

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11.2                           Notices.  Any notice required or permitted under
this Warrant shall be in writing and shall be hand delivered, sent by facsimile
or other electronic medium, by registered or certified mail, postage prepaid, or
by nationally recognized overnight carrier to the Company or to the Holder at
the address set forth below on the signature page to this Warrant or to such
other address as may be furnished in writing to the other party hereto.  Such
notice shall be deemed effectively given (i) if hand delivered, upon delivery,
(ii) if sent by facsimile or other electronic medium, when confirmed, if sent
during the normal business hours of the recipient (if not sent during the normal
business hours of the recipient, then on the next business day), (iii) if sent
by mail, five days after having been sent, or (iv) if sent by nationally
recognized overnight courier, one day after deposit with such courier.

 

11.3                           Attorneys’ Fees.  If any action at law or in
equity is necessary to enforce or interpret the terms of this Warrant, the
prevailing party shall be entitled to reasonable attorneys’ fees, costs and
disbursements in addition to any other relief to which such party may be
entitled.

 

11.4                           Amendments and Waivers.  Any term of this Warrant
may be amended and the observance of any other term of this Warrant may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and holders of
Warrants representing at least a majority of the aggregate number of Warrant
Shares issuable upon exercise of all outstanding Warrants issued pursuant to the
Loan Modification Agreement.  Any amendment or waiver effected in accordance
with this paragraph shall be binding upon the Company, the Holder and the
holders of all Warrants issued pursuant to the Loan Modification Agreement.

 

11.5                           Severability.  If one or more provisions of this
Warrant are held to be unenforceable under applicable law, such provision shall
be excluded from this Warrant and the balance of the Warrant shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.

 

11.6                           Governing Law.  This Warrant shall be governed by
and construed and enforced in accordance with the laws of the State of
California as applied to agreements among California residents entered into and
to be performed entirely within California.

 

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IN WITNESS WHEREOF, the undersigned have caused this Warrant to be executed by
its officers thereunto duly authorized.

 

COMPANY:

 

DIGIRAD CORPORATION

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

Todd P. Clyde
Chief Financial Officer

 

 

 

 

Address:

 

13950 Stowe Drive
Poway, CA 92064

 

 

 

 

 

 

HOLDER:

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

[COUNTERPART SIGNATURE PAGE TO

WARRANT TO PURCHASE COMMON STOCK OF DIGIRAD CORPORATION]

 

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SCHEDULE 1

 

FORM OF SUBSCRIPTION

 

(To be signed only on exercise of Warrant)

 

To:                              Digirad Corporation

 

The undersigned, the holder of the Warrant attached hereto, hereby irrevocably
elects to exercise the purchase rights represented by such Warrant for, and to
purchase thereunder,             * shares of common stock of Digirad
Corporation, and herewith makes payment of $               therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to                           , whose address is
                                                      .

 

 

 

 

 

(Signature must conform in all respects to name of the Holder as specified on
the face of the Warrant)

 

 

 

 

 

 

 

(Print Name)

 

 

 

 

 

 

 

(Address)

 

 

Dated:

 

 

 

 

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* Insert here the number of shares as to which the Warrant is being exercised.

 

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SCHEDULE OF INVESTORS

 

WARRANTHOLDER

 

NO. OF
SHARES

 

Gerald G. Loehr Separate Property Trust

 

16,042

 

Linda J. Loehr, Trustee, Martial Trust, Loehr Family Trust dtd 2/3/89

 

3,889

 

Linda J. Loehr, Trustee, Survivor’s Trust, Loehr Family Trust dtd 2/3/89

 

3,878

 

Total:

 

23,809

 

 

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