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


 





















 


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


 


4





















 


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]


 





















 


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:

  	
   

  	
   

  	
   

  
				



 










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


 





















 


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