THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL
UNDERSIGNED OF THE SECURITIES, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE ISSUER.
WARRANTS TO PURCHASE COMMON SHARES OF
MYO DIAGNOSTICS, INC.
THIS CERTIFIES that, for value received, ________________ (the
"Holder"), is the registered holder of _______ warrants (the "Warrants"). Each
Warrant entitles the holder, subject to the terms and conditions set forth in
this Certificate, to purchase from Myo Diagnostics, Inc. (the "Company"), one
fully paid and non-assessable Common Share of the Company (the "Share") at any
time commencing on the date hereof and continuing up to 5:00 p.m. (Toronto time)
on December 6, 1997 (the "Time of Expiry") on payment of U.S$3.00 per Share (the
"Exercise Price"). The number of Shares which the Holder is entitled to acquire
upon exercise of the Warrants and the Exercise Price are subject to adjustment
as hereinafter provided.
1. EXERCISE OF HOLDER'S WARRANTS
(a) ELECTION TO PURCHASE. The rights evidenced by this Certificate may be
exercised by the Holder in whole or in part and in accordance with the
provisions hereof by delivery of an Election to Purchase in substantially the
form attached hereto as Schedule "A", properly completed and executed, together
with payment of the Exercise Price for the number of Shares specified in the
Election to Purchase at the principal office of the Company at its head office
or as may be notified in writing by the Company (the "Company Office"). It is a
condition to the Company's obligation to issue Shares upon exercise that the
representation and warranties of the undersigned in a Subscription Agreement
dated May 9, 1996, as amended by an Amendment dated May 16, 1996, be true and
correct as of the date of exercise. In the event that the rights evidenced by
this Certificate are exercised in part, the Company shall, contemporaneously
with the issuance of the Shares issuable on the exercise of the Warrants so
exercised, issue to the Holder a Certificate on identical terms in respect of
that number of Shares in respect of which the Holder has not exercised the
rights evidenced by this certificate.
(b) EXERCISE. The Company shall, on the date it receives a duly executed
Election to Purchase and the Exercise Price for the number of Shares specified
in the Election to Purchase (the "Exercise Date"), issue that number of Shares
specified in the Election to Purchase as fully paid and non-assessable Shares in
the
capital of the Company.
(c) CERTIFICATES. As promptly as practicable after the Exercise Date and,
in any event, within five (5) business days of receipt of the Election to
Purchase, the Company shall issue and deliver to the Holder, registered in the
name of the Holder, a certificate or certificates for the number of Shares
specified in the Election to Purchase. To the extent permitted by law, such
exercise shall be deemed to have been effected as of the close of business on
the Exercise Date, and at such time the rights of the Holder with respect to the
number of Warrants which have been exercised as such shall cease, and the person
or persons in whose name or names any certificate or certificates for Shares
shall then be issuable upon such exercise shall be deemed to have become the
holder or holders of record of the Shares represented thereby.
(d) FRACTIONAL SHARES OR WARRANTS. No fractional Shares shall be issued
upon exercise of any Warrants and no payments or adjustment shall be made upon
any exercise on account of any cash dividends on the Shares issued upon such
exercise. If any fractional interest in a Share would, except for the
provisions of the first sentence of this Section l(d), be deliverable upon the
exercise of Warrants, the Company shall, in lieu of delivering the fractional
share therefor, pay to the Holder an amount in cash equal to the Fair Market
Value (as hereinafter defined) of such fractional interest.
(e) CORPORATE CHANGES
(i) Subject to paragraph 1(e)(ii) hereof, if the Company shall be a
party to any reorganization, merger, dissolution or sale of all or substantially
all of its assets, whether or not the Company is the surviving entity, the
number of Warrants evidenced by this certificate shall be adjusted so as to
apply to the securities to which the holder of that number of Shares subject to
the unexercised Warrants would have been entitled by reason of such
reorganization, merger, dissolution or sale of all or substantially all of its
assets (the "Event"), and the Exercise Price shall be adjusted to be the amount
determined by multiplying the Exercise Price in effect immediately prior to the
Event by the number of Shares subject to the unexercised Warrants immediately
prior to the Event, and dividing the product thereof by the number of securities
to Which the holder of that number of Shares subject to the unexercised Warrants
would have been entitled to by reason of such Event.
(ii) If the Company is unable to deliver securities to the Holder
pursuant to the proper exercise of Warrants, the Company may satisfy such
obligations to the Holder hereunder by paying to the Holder in cash the
difference between the Exercise Price of all unexercised Warrants granted
hereunder and the Fair Market Value of the securities to which the Holder would
be entitled to upon
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exercise of all unexercised Warrants. Adjustments under this subparagraph (e)
or (subject to subparagraph (n)) any determinations as to the Fair Market Value
of any securities shall be made by the board of directors of the Company, or any
committee thereof specifically designated by the board of directors to be
responsible therefor, and any reasonable determination made by such board or
committee thereof shall be binding and conclusive, subject only to any disputes
being resolved by the Company's auditors, whose determination shall be binding
and conclusive.
(f) SUBDIVISION OR CONSOLIDATION OF SHARES
(i) In the event the Company shall subdivide its outstanding common
shares into a greater number of shares, the Exercise Price in effect immediately
prior to such subdivision shall be proportionately reduced, and conversely, in
case the outstanding common shares of the Company shall be consolidated into a
smaller number of shares, the Exercise Price in effect immediately prior to such
consolidation shall be proportionately increased.
(ii) Upon each adjustment of the Exercise Price as provided herein,
the Holder shall thereafter be entitled to acquire, at the Exercise Price
resulting from such adjustment, the number of Shares (calculated to the nearest
tenth of a Share) obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Shares which may be
acquired hereunder immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(g) CHANGE OR RECLASSIFICATION OF SHARES. In the event the Company shall
change or reclassify its outstanding common shares into a different class of
securities, the rights evidenced by the Warrants shall be adjusted as follows so
as to apply to the successor class of securities:
(i) the number of the successor class of securities which the Holder
shall be entitled to acquire shall be that number of the successor class of
securities which a holder of that number of Shares subject to the unexercised
Warrants immediately prior to the change or reclassification would have been
entitled to by reason of such change or reclassification; and
(ii) the Exercise Price shall be determined by multiplying the
Exercise Price in effect immediately prior to the change or reclassification by
the number of Shares subject to the unexercised Warrants immediately prior to
the change or reclassification, and dividing the product thereof by the number
of shares determined in paragraph 1(g)(i) hereof.
(h) OFFERING TO SHAREHOLDERS. If and whenever at any time
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prior to the Time of Expiry, the Company shall fix a record date or if a date of
entitlement to receive is otherwise established (any such date being hereinafter
referred to in this Subsection 1(h) as the "record date") for the issuance of
rights, options or warrants to all or substantially all the holders or the
outstanding common shares of the Company entitling them, for a period expiring
not more than 45 days after such record date, to subscribe for or purchase
common shares of the Company or securities convertible into or exchangeable for
common shares at a price per share or, as the case may be, having a conversion
or exchange price per share less than 95% of the Fair Market Value (as
hereinafter defined) on such record date, the Exercise Price shall be adjusted
immediately after such record date so that it shall equal the price determined
by multiplying the Exercise Price in effect on such record date by a fraction,
of which the numerator shall be the total number of common shares outstanding on
such record date plus a number equal to the number arrived at by dividing the
aggregate subscription or purchase price of the total number of additional
common shares offered for subscription or purchase or, as the case may be, the
aggregate conversion or exchange price of the convertible or exchangeable
securities so offered by such Fair Market Value, and of which the denominator
shall be the total number of common shares outstanding on such record date plus
the total number of additional common shares so offered (or into which the
convertible or exchangeable securities so offered are convertible or
exchangeable); common shares owned by or held for the account of the Company or
any subsidiary of the Company shall be deemed not to be outstanding for the
purpose of any such computation; such adjustment shall be made successively
whenever such a record date is fixed; to the extent that any rights or warrants
are not so issued or any such rights or warrants are not exercised prior to the
expiration thereof, the Exercise Price shall then be readjusted to the Exercise
Price which would then be in effect if such record date had not been fixed or to
the Exercise Price which would then be in effect based upon the number of common
shares or conversion or exchange rights contained in convertible or exchangeable
securities actually issued upon the exercise of such rights or warrants, as the
case may be.
(i) CARRY OVER OF ADJUSTMENTS. No adjustment of the Exercise Price shall
be made if the amount of such adjustment shall be less than 1% of the Exercise
Price in effect immediately prior to the event giving rise to the adjustment,
provided, however, that in such case any adjustment that would otherwise be
required then to be made shall be carried forward and shall be made at the time
of and together with the next subsequent adjustment which, together with any
adjustment so carried forward, shall amount to at least 1% of the Exercise
Price.
(j) NOTICE OF ADJUSTMENT. Upon any adjustment of the number of Shares and
upon any adjustment of the Exercise Price, then and in each such case the
Company shall give written notice thereof to
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the Holder, which notice shall state the Exercise Price and the number of Shares
subject to the Warrants resulting from such adjustment, and shall set forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. Upon the request of the Holder there shall be transmitted
promptly to the Holder a statement of the firm of independent chartered
accountants retained to audit the financial statements of the Company to the
effect that such firm concurs in the Company's calculation of the change.
(k) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon its common shares
payable in Shares;
(ii) the Company shall offer for subscription pro rata to the holders
of its common shares any additional shares of any class or other rights;
(iii) there shall be any capital reorganization or reclassification of
the capital stock of the Company, or consolidation, amalgamation or merger of
the Company with, or sale of all or substantially all of its assets to, another
corporation; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company,
then, in any one or more of such cases, the Company shall give to the
Holder (A) at least 10 days' prior written notice of the date on which a record
shall be taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, amalgamation, sale, dissolution,
liquidation or winding-up and (B) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, at least 10 days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause (A) shall
also specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holders of common shares shall be entitled
thereto, and such notice in accordance with the foregoing clause (B) shall also
specify the date on which the holders of common shares shall be entitled to
exchange their common shares for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, amalgamation,
sale, dissolution, liquidation or winding-up, as the case may be.
(l) SHARES TO BE RESERVED. The Company will at all times keep available,
and reserve if necessary out of its authorized common shares, solely for the
purpose of issue upon the exercise of the Warrants, such number of Shares as
shall then be issuable upon
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the exercise of the Warrants. The Company covenants and agrees that all Shares
which shall be so issuable will, upon issuance, be duly authorized and issued as
fully paid and non-assessable and issued. The Company will take all such
actions as may be necessary to ensure that all such Shares may be so issued
without violation of any applicable requirements of any exchange upon which the
common shares of the Company may be listed or in respect of which the common
shares are qualified for unlisted trading privileges. The Company will take all
such actions are within its power to ensure that all such Shares may be so
issued without violation of any applicable law.
(m) ISSUE TAX. The issuance of certificates for Shares upon the exercise
of Warrants shall be made without charge to the Holder for any issuance tax in
respect thereto, provided that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the Holder.
(n) FAIR MARKET VALUE. For the purposes of any computation hereunder, the
"Fair Market Value" at any date shall be the weighted average sale price per
share for the common shares of the Company for the 20 consecutive trading days
immediately before such date on such principal stock exchange or
over-the-counter market as the common shares may then be listed or quoted (as
the case may be), or, if the shares in respect of which a determination of Fair
Market Value is being made are not listed on any stock exchange or quoted for
trading by a recognized over-the-counter market, the Fair Market Value shall be
determined by the firm of independent chartered accountants retained to audit
the financial statements of the Company, which determination shall be
conclusive. The weighted average price shall be determined by dividing the
aggregate sale price of all such shares sold on the said exchange during the
said 20 consecutive trading days by the total number of such shares so sold.
2. REPLACEMENT
Upon receipt of evidence satisfactory to the Company of the loss, theft,
destruction or mutilation of this Certificate and, if requested by the Company,
upon delivery of a bond of indemnity satisfactory to the Company (or, in the
case of mutilation, upon surrender of this Certificate), the Company will issue
to the Holder a replacement certificate (containing the same terms and
conditions as this Certificate).
3. NO TRANSFER OF WARRANT
The Warrant shall not be assignable or transferable except in accordance
with applicable securities laws and with the prior written consent of the
Company, such consent not to be unreasonably withheld.
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4. EXPIRY DATE
The Warrants shall expire and all rights to purchase Shares hereunder shall
cease and become null and void at the Time of Expiry.
5. GOVERNING LAW
The laws of the State of California and the federal laws of United States
of America applicable therein shall govern the Warrants.
6. SUCCESSORS
This Certificate shall enure to the benefit of and shall be binding upon
the Holder and the Company and their respective successors.
7. TRANSFER OF SHARES
The Holder agrees that none of the Shares or Warrants may be sold,
transferred, assigned, pledged, hypothecated or otherwise disposed of
("Transferred") except pursuant to an effective registration statement under the
Securities Act or unless the Company shall have received a written opinion of
counsel, in form and substance satisfactory to the Company and its counsel, to
the effect that the Transfer may be effected without registration under the
Securities Act. As a further condition to any such Transfer, except in the
event that such Transfer is made pursuant to an effective registration statement
under the Securities Act, if in the reasonable opinion of counsel to the Company
any Transfer of the Shares or Warrants by the contemplated transferee thereof
would not be exempt from the registration and prospectus delivery requirements
of the Securities Act, the Company may require the contemplated transferee to
furnish the Company with an investment letter setting forth such information and
agreements as may be reasonably requested by the Company to ensure compliance by
such transferee with the Securities Act.
Each certificate evidencing the Shares will bear the following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, ASSIGNED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL UNDERSIGNED
OF THE SECURITIES, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE
OF THE ISSUER."
The Company shall have no obligation to register any purported Transfer of
any of the Shares or any Warrants in violation of this
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agreement on its stock transfer records, and any such Transfer shall be null,
void and of no force and effect.
8. PLACE OF EXECUTION
These Warrants are exercisable only in the Province of Ontario. No shares
issuable upon exercise of the Warrants will be delivered in any other
jurisdiction.
IN WITNESS WHEREOF the Company has caused this Certificate to be signed by
its duly authorized officers and its corporate seal hereto affixed.
DATED as of the 6th day of December, 1996.
MYO DIAGNOSTICS, INC.
Per: /s/ Gerald D. Appel
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SCHEDULE "A"
Election to Exercise
The undersigned hereby irrevocably elects to exercise the number of Warrants of
Myo Diagnostics Inc. Inc. set out below for the number of Shares as set forth
below:
(a) Number of Warrants to be Exercised: ____________
(b) Number of Shares to be Acquired: ____________
(c) Exercise Price per Share: $___________
(d) Aggregate Purchase Price
[(a) MULTIPLIED BY (c)] $___________
and hereby tenders a certified cheque, bank draft or cash in United States
dollars for such aggregate purchase price, and directs such Shares to be
registered and a certificate therefor to be issued as directed below.
The undersigned hereby represents and warrants that the representations and
warranties of the undersigned in a Subscription Agreement dated May 9, 1996, as
amended by an Amendment dated May 16, 1996, are true and correct as of the date
hereof.
DATED this ____ day of _________________, 199__.
------------------------------
Name of Holder
By:
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