Document:

EXHIBIT 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

  	
   

  
	
  02/25/04

  	
   

  	
  James C.
  Engelman

  	
   

  	
  $

  	
  1.57

  	
   

  	
  15,000

  	
   

  	
  02/25/09

  	
   

  
	
  02/25/04

  	
   

  	
  Accel
  Management Group

  	
   

  	
  $

  	
  1.57

  	
   

  	
  5,000

  	
   

  	
  02/25/09

  	
   

  
	
  04/22/04

  	
   

  	
  Robert
  Greco, M.D.

  	
   

  	
  $

  	
  1.86

  	
   

  	
  5,000

  	
   

  	
  04/22/09

  	
   

  

 

9EXHIBIT 10.32

 

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

 

	
  MWC
  -            

  	
   

  	
  Date of Issuance
  – November 13, 2002

  

 

 

Void after
November 13, 2007

 

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 November 13, 2007 (the “Expiration
Date”) up to 50,000 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 $1.40  (the “Exercise Price”), subject to adjustment as
provided herein.

 

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 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

 

2

 

Warrant together with the aforesaid written statement, or on such later
date as is specified therein (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

 

3

 

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;

 

(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 his own
account and not with a view to or for sale in connection with any distribution
of this Warrant or the Warrant

 

5

 

Shares and he has no intention of selling such securities in a public
distribution in violation of the federal securities laws or any applicable
state securities laws;

 

(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

 

(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 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 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.

 

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

 

6

 

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 the Holder.

 

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.

 

 

[REMAINDER OF THIS
PAGE INTENTIONALLY LEFT BLANK]

 

7

 

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

 

	
  COMPANY:

  	
  DIGIRAD CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	 

	
   

  	
   

  	
  David M. Sheehan

  
	
   

  	
   

  	
  President and
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  HOLDER:

  	
   

  	
   

  

 

 

[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

 

Stephen A. McAdams

 

John C. Whitham

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