Document:

EXHIBIT
10.27

 

THIS WARRANT HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE
SECURITIES LAWS.  NO SALE OR DISPOSITION
MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO,
(ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO
THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF
NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR
(iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THIS WARRANT.

 

DIGIRAD CORPORATION

 

WARRANT TO
PURCHASE  SHARES

OF SERIES E PREFERRED
STOCK

 

THIS CERTIFIES THAT, for value received,
                                 
and its assignees are entitled to subscribe for and purchase
                 shares
of the fully paid and nonassessable Series E Preferred Stock (as adjusted
pursuant to Section 4 hereof, the “Shares”) of DIGIRAD CORPORATION, a
Delaware corporation (the “Company”), at the price of $3.036 per share (such
price and such other price as shall result, from time to time, from the
adjustments specified in Section 4 hereof is herein referred to as the “Warrant
Price”), subject to the provisions and upon the terms and conditions
hereinafter set forth.   As used herein,
(a) the term “Series Preferred” shall mean the Company’s presently
authorized Series E Preferred Stock, and any stock into or for which such
Series E Preferred Stock may hereafter be converted or exchanged, and after the
automatic conversion of the Series E Preferred Stock to Common Stock shall mean
the Company’s Common Stock, (b) the term “Date of Grant” shall mean
                                  ,
and (c) the term “Other Warrants” shall mean any other warrants issued by
the Company in connection with the transaction with respect to which this
Warrant was issued, the Loan and Security Agreement dated as of October 27,
1999 (the “Loan Agreement”) between the Company and the lender named therein,
and any warrant issued upon transfer or partial exercise of or in lieu of this
Warrant.  The term “Warrant” as used
herein shall be deemed to include Other Warrants unless the context clearly
requires otherwise.

 

If the Company is eligible under the Loan Agreement
and requests Lender to fund the Second Loan pursuant to the terms of the Loan
Agreement, but Lender elects not to fund the Second Loan, the number of shares
of the fully paid and nonassessable Series E Preferred Stock the holder is
entitled to subscribe for and purchase as set forth above shall be reduced from
                  
to
                  .  The terms “Lender” and “Second Loan” shall
have the meaning given these capitalized terms in the Loan Agreement.

 

1.             Term.  The purchase right represented by this
Warrant is exercisable, in whole or in part, at any time and from time to time
from the Date of Grant through the later of (i) seven (7) years after the
Date of Grant or (ii) five (5) years after the closing of the Company’s
initial public

 

 

offering of its Common Stock (“IPO”) effected pursuant to a
Registration Statement on Form S-1 (or its successor) filed under the
Securities Act of 1933, as amended (the “Act”).

 

2.             Method of Exercise; Payment; Issuance of New
Warrant.  Subject to Section 1 hereof, the
purchase right represented by this Warrant may be exercised by the holder
hereof, in whole or in part and from time to time, at the election of the
holder hereof, by (a) the surrender of this Warrant (with the notice of
exercise substantially in the form attached hereto as Exhibit A-1 duly
completed and executed) at the principal office of the Company and by the
payment to the Company, by certified or bank check, or by wire transfer to an
account designated by the Company (a “Wire Transfer”) of an amount equal to the
then applicable Warrant Price multiplied by the number of Shares then being
purchased; (b) if in connection with a registered public offering of the
Company’s securities, the surrender of this Warrant (with the notice of
exercise form attached hereto as Exhibit A-2 duly completed and executed)
at the principal office of the Company together with notice of arrangements
reasonably satisfactory to the Company for payment to the Company either by
certified or bank check or by Wire Transfer from the proceeds of the sale of
shares to be sold by the holder in such public offering of an amount equal to
the then applicable Warrant Price per share multiplied by the number of Shares
then being purchased; or (c) exercise of the “net issuance” right provided
for in Section 10.2 hereof.  The person
or persons in whose name(s) any certificate(s) representing shares of Series
Preferred shall be issuable upon exercise of this Warrant shall be deemed to
have become the holder(s) of record of, and shall be treated for all purposes
as the record holder(s) of, the shares represented thereby (and such shares
shall be deemed to have been issued) immediately prior to the close of business
on the date or dates upon which this Warrant is exercised.  In the event of any exercise of the rights
represented by this Warrant, certificates for the shares of stock so purchased
shall be delivered to the holder hereof as soon as possible and in any event
within thirty (30) days after such exercise and, unless this Warrant has been
fully exercised or expired, a new Warrant representing the portion of the
Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof as soon as possible and in
any event within such thirty-day period; provided, however, at such time as the
Company is subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended, if requested by the holder of this Warrant, the
Company shall cause its transfer agent to deliver the certificate representing
Shares issued upon exercise of this Warrant to a broker or other person (as
directed by the holder exercising this Warrant) within the time period required
to settle any trade made by the holder after exercise of this Warrant.

 

3.             Stock Fully Paid; Reservation of Shares.  All
Shares that may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance pursuant to the terms and conditions herein, be
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof.  During
the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized, and reserved for the
purpose of the issue upon exercise of the purchase rights evidenced by this
Warrant, a sufficient number of shares of its Series Preferred to provide for
the exercise of the rights represented by this Warrant and a sufficient number
of shares of its Common Stock to provide for the conversion of the Series
Preferred into Common Stock.

 

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4.             Adjustment of Warrant Price and Number of Shares.  The
number and kind of securities purchasable upon the exercise of this Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:

 

(a)           Reclassification or
Merger.  In case of any
reclassification or change of securities of the class issuable upon exercise of
this Warrant (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), or in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is the acquiring and the surviving corporation and which does not result in any
reclassification or change of outstanding securities issuable upon exercise of
this Warrant), or in case of any sale of all or substantially all of the assets
of the Company, the Company, or such successor or purchasing corporation, as
the case may be, shall duly execute and deliver to the holder of this Warrant a
new Warrant (in form and substance satisfactory to the  holder of this Warrant), or the Company
shall make appropriate provision without the issuance of a new Warrant, so that
the holder of this Warrant shall have the right to receive, at a total purchase
price not to exceed that payable upon the exercise of the unexercised portion
of this Warrant, and in lieu of the shares of Series Preferred theretofore
issuable upon exercise of this Warrant, (i) the kind and amount of shares
of stock, other securities, money and property receivable upon such
reclassification, change, merger or sale by a holder of the number of shares of
Series Preferred then purchasable under this Warrant, or (ii) in the case
of such a merger or sale in which the consideration paid consists all or in
part of assets other than securities of the successor or purchasing
corporation, at the option of the Holder of this Warrant, the securities of the
successor or purchasing corporation having a value at the time of the
transaction equivalent to the valuation of the Series Preferred at the time of
the transaction.  Any new Warrant shall
provide for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4.  The provisions of this subparagraph (a)
shall similarly apply to successive reclassifications, changes, mergers and
transfers.

 

(b)           Subdivision or
Combination of Shares.  If the
Company at any time while this Warrant remains outstanding and unexpired shall
subdivide or combine its outstanding shares of Series Preferred, the Warrant
Price shall be proportionately decreased and the number of Shares issuable
hereunder shall be proportionately increased in the case of a subdivision and
the Warrant Price shall be proportionately increased and the number of Shares
issuable hereunder shall be proportionately decreased in the case of a
combination.

 

(c)           Stock Dividends and
Other Distributions.  If the Company
at any time while this Warrant is outstanding and unexpired shall (i) pay
a dividend with respect to Series Preferred payable in Series Preferred, then
the Warrant Price shall be adjusted, from and after the date of determination
of shareholders entitled to receive such dividend or distribution, to that
price determined by multiplying the Warrant Price in effect immediately prior
to such date of determination by a fraction (A) the numerator of which
shall be the total number of shares of Series Preferred outstanding immediately
prior to such dividend or distribution, and (B) the denominator of which
shall be the total number of shares of Series Preferred outstanding immediately
after such dividend or distribution; or (ii) make any other distribution
with respect to Series Preferred (except any distribution specifically provided
for in Sections 4(a) and 4(b)), then, in each such case, provision shall
be made by the Company such that the holder of this

 

3

 

Warrant shall receive upon exercise of this Warrant a proportionate
share of any such dividend or distribution as though it were the holder of the
Series Preferred (or Common Stock issuable upon conversion thereof) as of the
record date fixed for the determination of the shareholders of the Company
entitled to receive such dividend or distribution.

 

(d)           Adjustment of Number
of Shares.  Upon each adjustment in
the Warrant Price, the number of Shares of Series Preferred purchasable
hereunder shall be adjusted, to the nearest whole share, to the product
obtained by multiplying the number of Shares purchasable immediately prior to
such adjustment in the Warrant Price by a fraction, the numerator of which
shall be the Warrant Price immediately prior to such adjustment and the
denominator of which shall be the Warrant Price immediately thereafter.

 

(e)           Antidilution Rights.  The other antidilution rights applicable to
the Shares of Series Preferred purchasable hereunder are set forth in the
Company’s Certificate of Incorporation, as amended through the Date of Grant, a
true and complete copy of which is attached hereto as Exhibit B (the
“Charter”).  Such antidilution rights
shall not be restated, amended, modified or waived in any manner that is adverse
to the holder hereof without such holder’s prior written consent.  The Company shall promptly provide the
holder hereof with any restatement, amendment, modification or waiver of the
Charter promptly after the same has been made.

 

5.             Notice of Adjustments.  Whenever
the Warrant Price or the number of Shares purchasable hereunder shall be
adjusted pursuant to Section 4 hereof, the Company shall make a
certificate signed by its chief financial officer setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Warrant Price and the
number of Shares purchasable hereunder after giving effect to such adjustment,
and shall cause copies of such certificate to be mailed (without regard to
Section 13 hereof, by first class mail, postage prepaid) to the holder of
this Warrant.  In addition, whenever the
conversion price or conversion ratio of the Series Preferred shall be adjusted,
the Company shall make a certificate signed by its chief financial officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
conversion price or ratio of the Series Preferred after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (without
regard to Section 13 hereof, by first class mail, postage prepaid) to the
holder of this Warrant.

 

6.             Fractional Shares.  No
fractional shares of Series Preferred will be issued in connection with any
exercise hereunder, but in lieu of such fractional shares the Company shall
make a cash payment therefor based on the fair market value of the Series
Preferred on the date of exercise as reasonably determined in good faith by the
Company’s Board of Directors.

 

7.             Compliance with Act; Disposition of Warrant or
Shares of Series Preferred.

 

(a)           Compliance with Act.  The holder of this Warrant, by acceptance
hereof, agrees that this Warrant, and the shares of Series Preferred to be
issued upon exercise hereof and any Common Stock issued upon conversion thereof
are being acquired for investment and that

 

4

 

such holder will not offer, sell or otherwise dispose of this Warrant,
or any shares of Series Preferred to be issued upon exercise hereof or any
Common Stock issued upon conversion thereof except under circumstances which
will not result in a violation of the Act or any applicable state securities
laws.  Upon exercise of this Warrant,
unless the Shares being acquired are registered under the Act and any
applicable state securities laws or an exemption from such registration is
available, the holder hereof shall confirm in writing that the shares of Series
Preferred so purchased (and any shares of Common Stock issued upon conversion
thereof) are being acquired for investment and not with a view toward
distribution or resale in violation of the Act and shall confirm such other
matters related thereto as may be reasonably requested by the Company.  This Warrant and all shares of Series
Preferred issued upon exercise of this Warrant and all shares of Common Stock
issued upon conversion thereof (unless registered under the Act and any
applicable state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:

 

“THE SECURITIES EVIDENCED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. 
NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE
REGISTRATION STATEMENTS RELATED THERETO, (ii) AN OPINION OF COUNSEL OR
OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS
ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE
GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS
OF SECTION 7 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED,
DIRECTLY OR INDIRECTLY.”

 

Said legend shall be removed by the Company, upon the
request of a holder, at such time as the restrictions on the transfer of the
applicable security shall have terminated. 
In addition, in connection with the issuance of this Warrant, the holder
specifically represents to the Company by acceptance of this Warrant as
follows:

 

(1)           The holder is aware of
the Company’s business affairs and financial condition, and has acquired
information about the Company sufficient to reach an informed and knowledgeable
decision to acquire this Warrant.  The
holder is acquiring this Warrant for its own account for investment purposes
only and not with a view to, or for the resale in connection with, any
“distribution” thereof in violation of the Act.  By executing this Warrant, the holder further represents as of
the Date of Grant that the holder does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Shares or this Warrant.

 

(2)           The holder is a holder
in securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its holding and has such
knowledge ad experience in financial and business matters that it is capable of
evaluating the merits and risks of the acquisition of this Warrant and the
Shares.

 

(3)                   The holder
understands that this Warrant has not been registered under the Act in reliance
upon a specific exemption therefrom, which exemption

 

5

 

depends upon, among other things, the bona fide nature of the holder’s
investment intent as expressed herein.

 

(4)           The holder further
understands that this Warrant must be held indefinitely unless subsequently
registered under the Act and qualified under any applicable state securities
laws, or unless exemptions from registration and qualification are otherwise
available.  The holder is aware of the
provisions of Rule 144, promulgated under the Act.

 

(5)           The holder is an
“accredited investor” as such term is defined in Rule 501 of
Regulation D promulgated under the Act.

 

(b)           Disposition of
Warrant or Shares.  With respect to
any offer, sale or other disposition of this Warrant or any shares of Series
Preferred acquired pursuant to the exercise of this Warrant prior to
registration of such Warrant or shares, the holder hereof agrees to give
written notice to the Company prior thereto, describing briefly the manner
thereof, together with a written opinion of such holder’s counsel, or other
evidence, if reasonably satisfactory to the Company, to the effect that such
offer, sale or other disposition may be effected without registration or
qualification (under the Act as then in effect or any federal or state
securities law then in effect) of this Warrant or such shares of Series
Preferred or Common Stock and indicating whether or not under the Act
certificates for this Warrant or such shares of Series Preferred to be sold or
otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with such law.  Upon receiving such written notice and
reasonably satisfactory opinion or other evidence, the Company, as promptly as
practicable but no later than fifteen (15) days after receipt of the written
notice, shall notify such holder that such holder may sell or otherwise dispose
of this Warrant or such shares of Series Preferred or Common Stock, all in
accordance with the terms of the notice delivered to the Company.  If a determination has been made pursuant to
this Section 7(b) that the opinion of counsel for the holder or other
evidence is not reasonably satisfactory to the Company, the Company shall so
notify the holder promptly with details thereof after such determination has
been made.  Notwithstanding the
foregoing, this Warrant or such shares of Series Preferred or Common Stock may,
as to such federal laws, be offered, sold or otherwise disposed of in
accordance with Rule 144 or 144A under the Act, provided that the Company
shall have been furnished with such information as the Company may reasonably
request to provide a reasonable assurance that the provisions of Rule 144
or 144A have been satisfied.  Each
certificate representing this Warrant or the shares of Series Preferred thus
transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a
legend as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the
holder, such legend is not required in order to ensure compliance with such
laws.  The Company may issue stop
transfer instructions to its transfer agent in connection with such
restrictions.

 

(c)           Applicability of
Restrictions.  Neither any
restrictions of any legend described in this Warrant nor the requirements of
Section 7(b) above shall apply to any transfer of, or grant of a security
interest in, this Warrant (or the Series Preferred or Common Stock obtainable
upon exercise thereof) or any part hereof (i) to a partner of the holder
if the holder is a partnership or to a member of the holder if the holder is a
limited liability company, (ii) to a

 

6

 

partnership of which the holder is a partner or to a limited liability
company of which the holder is a member, or (iii) to any affiliate of the
holder if the holder is a corporation; provided, however, in any
such transfer, if applicable, the transferee shall on the Company’s request
agree in writing to be bound by the terms of this Warrant as if an original
holder hereof.

 

8.             Rights as Shareholders; Information.  No
holder of this Warrant, as such, shall be entitled to vote or receive dividends
or be deemed the holder of Series Preferred or any other securities of the
Company which may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained herein be construed to confer upon the
holder of this Warrant, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until
this Warrant shall have been exercised and the Shares purchasable upon the
exercise hereof shall have become deliverable, as provided herein.  Notwithstanding the foregoing, the Company
will transmit to the holder of this Warrant such information, documents and
reports as are generally distributed to the holders of any class or series of
the securities of the Company concurrently with the distribution thereof to the
shareholders.

 

9.             Market Stand-Off Agreement.  During
the time period not to exceed 180 days specified by the Company and an
underwriter of securities of the Company, following the effective date of a
registration statement of the Company filed under the Act (the “Lock-up”), the
holder 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 transferees or 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 this Section 9 shall be applicable (a) only to the first such
registration statement of the Company pursuant to which Common Stock (or other
securities) of the Company are to be sold on its behalf to the public in an
underwritten offering, and (b) only if all officers and directors of the
Company enter into similar agreements, and (c) such underwriters certify to the
holder of this Warrant in writing that (1) they have determined that the holder
must be so bound during the Lock-up or it would have a material negative impact
on the offering, and (2) all other holders of warrants of the Company have
agreed to be similarly restricted.   In
order to enforce the foregoing covenant, the Company may impose stop-transfer
restrictions with respect to the Shares of the holder (and the shares or
securities of every person subject to the foregoing restriction) until the end
of such period

 

10.           Additional Rights.

 

10.1         Acquisition
Transactions.  The Company shall
provide the holder of this Warrant with at least twenty (20) days’ written
notice prior to closing thereof of the terms and conditions of any of the
following transactions (to the extent the Company has notice thereof):
(i) the sale, lease, exchange, conveyance or other disposition of all or
substantially all of the Company’s property or business, or (ii) its
merger into or consolidation with any other corporation (other than a
wholly-owned subsidiary of the Company), or any transaction (including a merger
or other

 

7

 

reorganization) or series of related transactions, in which more than
50% of the voting power of the Company is disposed of.

 

10.2         Right
to Convert Warrant into Stock:  Net
Issuance.

 

(a)           Right to Convert.  In addition to and without limiting the
rights of the holder under the terms of this Warrant, the holder shall have the
right to convert this Warrant or any portion thereof (the “Conversion Right”)
into shares of Series Preferred (or Common Stock if the Series Preferred has
been automatically converted into Common Stock) as provided in this Section
10.2 at any time or from time to time during the term of this Warrant.  Upon exercise of the Conversion Right with
respect to a particular number of shares subject to this Warrant (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 Series Preferred (or
Common Stock if the Series Preferred has been automatically converted into
Common Stock) as is determined according to the following formula:

 

X =   B -
A  

           Y

 

Where:       X 
=                     the
number of shares of Series Preferred (or Common Stock if the Series Preferred
has been automatically converted to Common Stock) that shall  be issued to holder

 

Y  =                     the fair market value of one share
of Series Preferred (or Common Stock if the Series Preferred has been
automatically converted to Common Stock)

 

A  =                    the aggregate Warrant Price of the
specified number of Converted Warrant Shares immediately prior to the exercise
of the Conversion Right (i.e., the number of Converted Warrant
Shares multiplied
by the Warrant Price)

 

B  =                     the aggregate fair market value of
the specified number of Converted Warrant Shares (i.e., the number of
Converted Warrant Shares multiplied by the fair market value of one
Converted Warrant Share)

 

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 hereinafter
defined).  For purposes of
Section 9 of this Warrant, shares issued pursuant to the Conversion Right
shall be treated as if they were issued upon the exercise of this Warrant.

 

(b)           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

 

8

 

written statement (which may be in the form of Exhibit A-1 or
Exhibit A-2 hereto) specifying that the holder thereby intends to exercise
the Conversion Right and indicating the number of shares subject to this
Warrant which are being surrendered (referred to in Section 10.2(a) hereof
as the Converted Warrant Shares) in exercise of 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 (the “Conversion
Date”), and, at the election of the holder hereof, may be made contingent upon
the closing of the sale of the Company’s Common Stock to the public in a public
offering pursuant to a Registration Statement under the Act (a “Public
Offering”).  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 this Warrant,
shall be issued as of the Conversion Date and shall be delivered to the holder
within thirty (30) days following the Conversion Date.

 

(c)           Determination of
Fair Market Value.  For purposes of
this Section 10.2, “fair market value” of a share of Series Preferred (or
Common Stock if the Series Preferred has been automatically converted into
Common Stock) as of a particular date (the “Determination Date”) shall mean:

 

(i)    If the Conversion Right is
exercised in connection with and contingent upon a Public Offering, and if the
Company’s Registration Statement relating to such Public Offering
(“Registration Statement”) has been declared effective by the Securities and
Exchange Commission, then the initial “Price to Public” specified in the final
prospectus with respect to such offering.

 

(ii)   If the Conversion Right is not
exercised in connection with and contingent upon a Public Offering, then as
follows:

 

(A)          If traded on a
securities exchange, the fair market value of the Common Stock shall be deemed
to be the average of the closing prices of the Common Stock on such exchange
over the 30-day period ending five business days prior to the Determination
Date, and the fair market value of the Series Preferred shall be deemed to be
such fair market value of the Common Stock multiplied by the number of shares
of Common Stock into which each share of Series Preferred is then convertible;

 

(B)           If traded on the Nasdaq
Stock Market or other over-the-counter system, the fair market value of the
Common Stock shall be deemed to be the average of the closing bid prices of the
Common Stock over the 30-day period ending five business days prior to the
Determination Date, and the fair market value of the Series Preferred shall be
deemed to be such fair market value of the Common Stock multiplied by the
number of shares of Common Stock into which each share of Series Preferred is
then convertible; and

 

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

 

10.3         Exercise
Prior to Expiration.  To the extent
this Warrant is not previously exercised as to all of the Shares subject
hereto, and if the fair market value of one share of the

 

9

 

Series Preferred is greater than the Warrant Price then in effect, this
Warrant shall be deemed automatically exercised pursuant to Section 10.2
above (even if not surrendered) immediately before its expiration.  For purposes of such automatic exercise, the
fair market value of one share of the Series Preferred upon such expiration
shall be determined pursuant to Section 10.2(c).  To the extent this Warrant or any portion thereof is deemed
automatically exercised pursuant to this Section 10.3, the Company agrees
to promptly notify the holder hereof of the number of Shares, if any, the
holder hereof is to receive by reason of such automatic exercise.

 

11.           Representations and Warranties.  The
Company represents and warrants to the holder of this Warrant as follows:

 

(a)           This Warrant has been
duly authorized and executed by the Company and is a valid and binding
obligation of the Company enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief
of debtors and the rules of law or principles at equity governing specific
performance, injunctive relief and other equitable remedies;

 

(b)           The Shares have been
duly authorized and reserved for issuance by the Company and, when issued in
accordance with the terms hereof, will be validly issued, fully paid and
non-assessable;

 

(c)           The rights,
preferences, privileges and restrictions granted to or imposed upon the Series
Preferred and the holders thereof are as set forth in the Charter, and on the
Date of Grant, each share of the Series Preferred represented by this Warrant
is convertible into one share of Common Stock;

 

(d)           The shares of Common
Stock issuable upon conversion of the Shares have been duly authorized and
reserved for issuance by the Company and, when issued in accordance with the
terms of the Charter will be validly issued, fully paid and nonassessable;

 

(e)           The execution and
delivery of this Warrant are not, and the issuance of the Shares upon exercise
of this Warrant in accordance with the terms hereof will not be, inconsistent
with the Company’s Charter or by-laws, do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to the Company,
and do not and will not conflict with or contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument of which the Company is a party or by which it is bound or require
the consent or approval of, the giving of notice to, the registration or filing
with or the taking of any action in respect of or by, any Federal, state or
local government authority or agency or other person, except for the filing of
notices pursuant to federal and state securities laws, which filings will be
effected by the time required thereby; and

 

(f)            There are no actions,
suits, audits, investigations or proceedings pending or, to the knowledge of
the Company, threatened against the Company in any court or before any
governmental commission, board or authority which, if adversely determined,
will have a material adverse effect on the ability of the Company to perform
its obligations under this Warrant.

 

10

 

(g)           The number of shares of
Common Stock of the Company outstanding on the date hereof, on a fully diluted
basis (assuming the conversion of all outstanding convertible securities and
the exercise of all outstanding options and warrants), does not exceed
25,891,150 shares.

 

12.           Modification and Waiver.  This
Warrant and any provision hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of the same is sought.

 

13.           Notices.  Any notice, request,
communication or other document required or permitted to be given or delivered
to the holder hereof or the Company shall be delivered, or shall be sent by
certified or registered mail, postage prepaid, to each such holder at its
address as shown on the books of the Company or to the Company at the address
indicated therefor on the signature page of this Warrant.

 

14.           Binding Effect on Successors.  This
Warrant shall be binding upon any corporation succeeding the Company by merger,
consolidation or acquisition of all or substantially all of the Company’s
assets, and all of the obligations of the Company relating to the Series
Preferred issuable upon the exercise or conversion of this Warrant shall
survive the exercise, conversion and termination of this Warrant and all of the
covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof.

 

15.           Lost Warrants or Stock Certificates.  The
Company covenants to the holder hereof that, upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate and, in the case of any
such loss, theft or destruction, upon receipt of an indemnity reasonably
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Warrant or stock certificate, the Company
will make and deliver a new Warrant or stock certificate, of like tenor, in
lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.

 

16.           Descriptive Headings.  The
descriptive headings of the several paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant.  The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.

 

17.           Governing Law.  This Warrant shall be construed
and enforced in accordance with, and the rights of the parties shall be
governed by, the laws of the State of California (without giving effect to
principles of conflicts of laws).

 

18.           Survival of Representations, Warranties and
Agreements.  All representations and warranties of the
Company and the holder hereof contained herein shall survive the Date of Grant,
the exercise or conversion of this Warrant (or any part hereof) or the
termination or expiration of rights hereunder. 
All agreements of the Company and the holder hereof contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.

 

11

 

19.           Remedies.  In case any one or more of the
covenants and agreements contained in this Warrant shall have been breached,
the holders hereof (in the case of a breach by the Company), or the Company (in
the case of a breach by a holder), may proceed to protect and enforce their or
its rights either by suit in equity and/or by action at law, including, but not
limited to, an action for damages as a result of any such breach and/or an
action for specific performance of any such covenant or agreement contained in
this Warrant.

 

20.           No Impairment of Rights.  The
Company will not, by amendment of its Charter or through any other means, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant
against impairment.

 

21.           Severability.  The invalidity or unenforceability
of any provision of this Warrant in any jurisdiction shall not affect the
validity or enforceability of such provision in any other jurisdiction, or
affect any other provision of this Warrant, which shall remain in full force
and effect.

 

22.           Recovery of Litigation Costs.  If any
legal action or other proceeding is brought for the enforcement of this
Warrant, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Warrant, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys’ fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled.

 

23.           Entire Agreement; Modification.  This
Warrant constitutes the entire agreement between the parties pertaining to the
subject matter contained in it and supersedes all prior and contemporaneous
agreements, representations, and undertakings of the parties, whether oral or
written, with respect to such subject matter.

 

12

 

The Company has caused this Warrant to be duly
executed and delivered as of the Date of Grant specified above.

 

	
   

  	
  DIGIRAD CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:  9350 Trade Place

  
	
   

  	
  San Diego, CA 92121

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
					

 

13

 

EXHIBIT A-1

 

NOTICE OF EXERCISE

 

To:          DIGIRAD CORPORATION (the
“Company”)

 

1.             The undersigned
hereby:

 

o            elects to
purchase                  
shares of [Series Preferred Stock] [Common Stock] of the Company pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price of such shares in full, or

 

o            elects to exercise its net issuance rights
pursuant to Section 10.2 of the attached Warrant with respect
to               Shares
of [Series Preferred Stock] [Common Stock].

 

2.             Please
issue a certificate or certificates representing
                
shares in the name of the undersigned or in such other name or names as are
specified below:

 

	
   

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  

 

3.             The
undersigned represents that the aforesaid shares are being acquired for the
account of the undersigned for investment and not with a view to, or for resale
in connection with, the distribution thereof and that the undersigned has no
present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws.

 

	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  	
   

  

 

 

EXHIBIT A-2

 

NOTICE OF EXERCISE

 

To:          DIGIRAD CORPORATION (the
“Company”)

 

1.             Contingent
upon and effective immediately prior to the closing (the “Closing”) of the
Company’s public offering contemplated by the Registration Statement on
Form S      ,
filed             ,
19   , the undersigned hereby:

 

o            elects to
purchase                shares
of [Series Preferred Stock] [Common Stock] of the Company (or such lesser
number of shares as may be sold on behalf of the undersigned at the Closing)
pursuant to the terms of the attached Warrant, or

 

o            elects to exercise its
net issuance rights pursuant to Section 10.2 of the attached Warrant with
respect
to                Shares
of [Series Preferred Stock] [Common Stock].

 

2.             Please
deliver to the custodian for the selling shareholders a stock certificate
representing
such                shares.

 

3.             The undersigned has
instructed the custodian for the selling shareholders to deliver to the Company
$                or,
if less, the net proceeds due the undersigned from the sale of shares in the
aforesaid public offering.  If such net
proceeds are less than the purchase price for such shares, the undersigned
agrees to deliver the difference to the Company prior to the Closing.

 

	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  	
   

  

 

 

EXHIBIT B

 

CHARTER

 

 

SCHEDULE OF INVESTORS

 

	
  DATE OF

  GRANT

  	
   

  	
  WARRANTHOLDER

  	
   

  	
  NUMBER OF

  SHARES

  	
   

  	
  NUMBER OF

  SHARES WITHOUT

  SECOND LOAN

  	
   

  
	
  10/27/1999

  	
   

  	
  Priority Capital

  	
   

  	
  24,703

  	
   

  	
  Reduction from

  24,703 to 16,469

  	
   

  
	
  10/27/1999

  	
   

  	
  Meier Mitchell & Company

  	
   

  	
  172,925

  	
   

  	
  Reduction from

  172,925 to 115,283

  	
   

  
	
  05/09/2000

  	
   

  	
  Meier Mitchell & Company

  	
   

  	
  27,307

  	
   

  	
  Reduction from

  172,925 to 115,283

  	
   

  
	
  05/09/2000

  	
   

  	
  Priority Capital

  	
   

  	
  3,901

  	
   

  	
  Reduction from

  24,703 to 16,469EXHIBIT 10.28

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF 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 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 -
                

 

Void after
                

 

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, subject to
Section 2.3 herein, before 5:00 PM Pacific time on
                                   
(the “EXPIRATION DATE”) up to
                        
(                 )
fully paid and nonassessable shares of Common Stock of the Company, subject to
adjustment as provided herein (the “WARRANT SHARES”)  The purchase price per share of such Common Stock upon exercise
of this Warrant shall be
$              
(the “PURCHASE PRICE”), subject to adjustment as provided herein.

 

1.             INITIAL EXERCISE DATE; EXPIRATION.  Subject to Section 2.3 herein, this Warrant
may be exercised by the Holder at any time or from time to time before 5:00 PM,
Pacific time, on
                             
(the “EXERCISE PERIOD”) for that number of Warrant Shares set forth in Section
2.2 below.

 

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 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 Purchase Price of the shares of Common Stock to be
purchased hereunder in an amount equal to such Purchase Price.  For any partial exercise hereof, the Holder
shall designate in a subscription in the form of Schedule 1 attached hereto
delivered to the Company the number of shares of Common Stock that 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           NUMBER OF WARRANT
SHARES.  Subject to adjustment as
hereinafter provided, as of the Date of Issuance, the rights represented by
this Warrant are immediately exercisable for
                   
shares of Common Stock of the Company.

 

2.3           TERMINATION OF THE
WARRANT UPON A CORPORATE TRANSACTION. 
Immediately following a Corporate Transaction (as hereinafter defined),
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, “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 shares subject to the Warrant (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 Purchase
  Price (as adjusted through the Conversion Date)

  
								

 

The Conversion
Right may only be exercised with respect to a whole number of shares subject to
the Warrant.  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

 

2

 

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 the Warrant.

 

3.2           METHOD OF EXERCISE.  The Conversion Right may be exercised by the
Holder by the surrender of the 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
the Warrant that the Holder is exercising through the Conversion Right.  Such conversion shall be effective upon
receipt by the Company of the Warrant together with the aforesaid written statement,
or on such later date as is specified therein (the “CONVERSION DATE”).  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 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 an 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 an 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, then the fair market value shall be determined in
good faith by the Board of Directors of the Company.

 

4.             WHEN EXERCISE EFFECTIVE.  The exercise of this Warrant 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, 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, 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

 

3

 

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 in good faith by the
Board of Directors.

 

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 Purchase 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 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 into a larger number of shares
of Common Stock or (c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, then and in each such event the
Purchase 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
Purchase 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 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 Purchase
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 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 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 of the Company 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 of Directors
of the Company shall make an adjustment in the number and class of shares
available under the Warrant, the Purchase 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 of the
Warrant upon exercise for the same aggregate Purchase Price the total number,
class and kind of shares as the Holder would have owned had the 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 shareholder 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 Act and that such securities have not been and
will not be registered under the Act or any state securities law, and that such
securities must be held indefinitely unless a transfer can be made pursuant to
appropriate exemptions;

 

(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;

 

(3)               the Holder is
purchasing for investment for 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 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;

 

5

 

(4)               the Holder is an
“accredited investor” within the meaning of paragraph (a) of Rule 501 of
Regulation D promulgated by the Securities and Exchange Commission (the “Commission”)
and an “excluded purchaser” within the meaning of Section 25102(f) of the
California Corporate Securities Law of 1968; and

 

(5)               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, (ii) has had an opportunity to ask questions and receive answers from
the Company regarding the terms and conditions of this Warrant 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.

 

10.           MISCELLANEOUS.

 

10.1         TRANSFER OF WARRANT.  This Warrant shall not be transferable or
assignable by the Holder without the express written consent of the Company.

 

10.2         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, or mailed, postage prepaid, 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.

 

10.3         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.

 

10.4         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 the Holder.

 

10.5         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.

 

10.6         GOVERNING LAW.  This Warrant shall be governed by and
construed and enforced in accordance with the laws of the State of California,
without giving effect to its conflicts of laws principles.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT
BLANK]

 

6

 

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

 

	
   

  	
   

  	
  DIGIRAD CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  9350 Trade Place

  	
   

  
	
   

  	
   

  	
  San Diego, CA  92126-6334

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

[SIGNATURE PAGE TO WARRANT OF DIGIRAD
CORPORATION]

 

7

 

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.

 

8

 

SCHEDULE OF WARRANTHOLDERS

 

	
  DATE

  	
   

  	
  WARRANTHOLDER

  	
   

  	
  PRICE

  	
   

  	
  NUMBER OF

  SHARES

  	
   

  	
  EXPIRATION
  /

  EXERCISE

  PERIOD

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11/14/00

  	
   

  	
  Cardiovascular
  Consultants

  	
   

  	
  $

  	
  1.50

  	
   

  	
  10,000

  	
   

  	
  11/14/05

  	
   

  
	
  11/14/00

  	
   

  	
  Robert
  McKenzie

  	
   

  	
  $

  	
  3.04

  	
   

  	
  500

  	
   

  	
  11/14/05

  	
   

  
	
  01/04/01

  	
   

  	
  Stephen A
  McAdams

  	
   

  	
  $

  	
  1.50

  	
   

  	
  10,000

  	
   

  	
  01/04/06

  	
   

  
	
  01/04/01

  	
   

  	
  John C
  Whitham

  	
   

  	
  $

  	
  1.50

  	
   

  	
  10,000

  	
   

  	
  01/04/06

  	
   

  
	
  01/26/01

  	
   

  	
  Oklahoma
  Cardiovascular Associates

  	
   

  	
  $

  	
  2.00

  	
   

  	
  20,000

  	
   

  	
  01/26/06

  	
   

  
	
  03/01/01

  	
   

  	
  Stephen A
  McAdams

  	
   

  	
  $

  	
  3.04

  	
   

  	
  5,000

  	
   

  	
  03/01/06

  	
   

  
	
  03/01/01

  	
   

  	
  John C
  Whitham

  	
   

  	
  $

  	
  3.04

  	
   

  	
  5,000

  	
   

  	
  03/01/06

  	
   

  
	
  03/28/01

  	
   

  	
  Stephen A
  McAdams

  	
   

  	
  $

  	
  3.04

  	
   

  	
  10,000

  	
   

  	
  03/28/06

  	
   

  
	
  03/28/01

  	
   

  	
  John C
  Whitham

  	
   

  	
  $

  	
  3.04

  	
   

  	
  10,000

  	
   

  	
  03/28/06

  	
   

  
	
  05/15/01

  	
   

  	
  Stephen A
  McAdams

  	
   

  	
  $

  	
  3.04

  	
   

  	
  5,000

  	
   

  	
  05/15/06

  	
   

  
	
  05/15/01

  	
   

  	
  John C
  Whitham

  	
   

  	
  $

  	
  3.04

  	
   

  	
  5,000

  	
   

  	
  05/15/06

  	
   

  
	
  05/15/01

  	
   

  	
  Austin Heart

  	
   

  	
  $

  	
  3.04

  	
   

  	
  10,000

  	
   

  	
  05/15/06

  	
   

  
	
  07/19/01

  	
   

  	
  Stephen A
  McAdams

  	
   

  	
  $

  	
  3.04

  	
   

  	
  50,000

  	
   

  	
  07/19/06

  	
   

  
	
  07/19/01

  	
   

  	
  John C
  Whitham

  	
   

  	
  $

  	
  3.04

  	
   

  	
  50,000

  	
   

  	
  07/19/06

  	
   

  
	
  12/14/01

  	
   

  	
  Stephen A.
  McAdams

  	
   

  	
  $

  	
  1.50

  	
   

  	
  8,333

  	
   

  	
  12/14/06

  	
   

  
	
  12/14/01

  	
   

  	
  John C.
  Whitham

  	
   

  	
  $

  	
  1.50

  	
   

  	
  8,333

  	
   

  	
  12/14/06

  	
   

  
	
  12/14/01

  	
   

  	
  Oklahoma
  Cardiovascular Associates

  	
   

  	
  $

  	
  3.00

  	
   

  	
  5,000

  	
   

  	
  12/14/06

  	
   

  
	
  03/05/02

  	
   

  	
  Dr. Bob
  Jaros

  	
   

  	
  $

  	
  3.00

  	
   

  	
  6,000

  	
   

  	
  03/05/07

  	
   

  
	
  03/05/02

  	
   

  	
  Dr. Dan
  Stobbe

  	
   

  	
  $

  	
  3.00

  	
   

  	
  5,000

  	
   

  	
  03/05/07

  	
   

  

 

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00065-of-00352.parquet"}]]