Exhibit 10.3
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND MAY ONLY BE ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE
EXERCISE OF THIS WARRANT, IF ANY, MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH
SECURITIES UNDER THE ACT AND QUALIFICATION UNDER APPLICABLE STATE LAW WITHOUT AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER
FROM THE SECURITIES AND EXCHANGE COMMISION.
November __, 2007
HC INNOVATIONS, INC.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
For value received, this warrant (the "WARRANT") is hereby issued by HC
INNOVATIONS, INC., a Delaware corporation (the "COMPANY"), to [INSERT NAME OF
HOLDER] (the "HOLDER"). Subject to the provisions of this Warrant, the Company
hereby grants to the Holder the right to purchase from the Company up to [10% OF
FACE AMOUNT OF NOTE: INSERT AMOUNT] shares of common stock of the Company's
fully paid and non-assessable shares of Common Stock, at an exercise price per
share as defined below.
The term "COMMON STOCK" means the Common Stock, par value $0.001 per
share, of the Company. The number of shares of Common Stock to be received upon
the exercise of this Warrant may be adjusted from time to time as hereinafter
set forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter referred to as "WARRANT SHARES."
The term "EXERCISE PRICE" means the exercise price of any warrants
issued in connection with the Company's Qualified Financing (as defined below);
provided, however, that in the event the Company does not consummate a Qualified
Financing prior to the Maturity Date (as defined below) of that certain
Twelve-Month 10% Secured Convertible Note (the "Note") issued in connection
herewith to the Holder on the date hereof, the "Exercise Price" shall be the
average of the lowest bid prices for the consecutive twenty (20) trading day
period prior to the Maturity Date.
The term "MATURITY DATE" means November __, 2008.
The term "QUALIFIED FINANCING" is defined as the sale for cash by the
Company in a transaction or series of related transactions of debt, equity,
equity-linked securities or any
combination thereof (the "SECURITIES") generating gross proceeds to the Company
(excluding the principal amount of any Notes tendered in connection therewith)
of at least $10,000,000.
The Holder agrees with the Company that this Warrant is issued, and all
the rights hereunder shall be held, subject to all of the conditions,
limitations and provisions set forth herein.
1. EXERCISE OF WARRANT. (a) Subject to the terms and conditions
set forth herein, the Holder may exercise this Warrant, in whole or in part, at
any time or from time to time, pursuant to the procedures provided below, at any
time on or before the earlier of (i) 5:00 p.m., New York time, on the day
occurring five (5) years from [INSERT THE WARRANT ISSUANCE DATE] (the
"EXPIRATION DATE") or, if such day is a day on which banking institutions in New
York are authorized by law to close, then on the next succeeding day that shall
not be such a day. The Warrant shall only be exercisable on a cash basis. To
exercise this Warrant, in whole or in part, the Holder shall present and
surrender this Warrant to the Company at its principal office, with the Warrant
Exercise Form attached hereto duly executed by the Holder and accompanied by
payment in cash, wire transfer or by check, payable to the order of the Company,
of the aggregate Exercise Price for the total aggregate number of shares of
Common Stock for which this Warrant is exercised. To the extent that a portion
of this Warrant is not exercised, the Company shall issue a new warrant
representing the unexercised portion. Upon receipt by the Company of this
Warrant, together with the executed Warrant Exercise Form and payment of the
Exercise Price for the shares to be acquired, in proper form for exercise, and
subject to the Holder's compliance with all requirements of this Warrant for the
exercise hereof, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder; PROVIDED, HOWEVER, that no exercise of this Warrant shall be
effective, and the Company shall have no obligation to issue any Common Stock to
the Holder upon any attempted exercise of this Warrant, unless the Holder shall
have first delivered to the Company, in form and substance reasonably
satisfactory to the Company, appropriate representations so as to provide the
Company reasonable assurances that the securities issuable upon exercise may be
issued without violation of the registration requirements of the Securities Act
and applicable state securities laws, including without limitation
representations that the Holder is familiar with the Company and its business
and financial condition and has had an opportunity to ask questions and receive
documents relating thereto to his reasonable satisfaction.
2. RESERVATION OF SHARES. The Company will at all times reserve
for issuance and delivery upon exercise of this Warrant all shares of Common
Stock from time to time receivable upon exercise of this Warrant. All such
shares shall be duly authorized and, when issued upon such exercise, shall be
validly issued, fully paid and non-assessable and free of all preemptive rights.
3. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant.
4. INTENTIONALLY DELETED.
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5. REGISTRATION RIGHTS. The Holder shall have certain
registration rights with respect to the registration the Warrant Shares as
provided in that certain Registration Rights Agreement by and between the
Company and the parties thereto.
6. ASSIGNMENT OR LOSS OF WARRANT.
6.1 Subject to the transfer restrictions herein
(including Section 9), upon surrender of this Warrant to the Company or at the
office of its stock transfer agent, if any, with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any transfer tax, the Company
shall, without charge, execute and deliver a new Warrant or Warrants in the name
of the assignee or assignees and in the denomination or denominations specified
in the instrument or assignment, and shall issue to the assignor a new Warrant
evidencing any portion of this Warrant not so assigned, and this Warrant
certificate shall promptly be cancelled. A Warrant, if properly assigned in its
entirety in compliance with Section 9, may be exercised by the new Holder
without the issuance of a new Warrant certificate.
6.2 Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant, and of reasonably satisfactory indemnification by the Holder, and upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a replacement Warrant of like tenor and date.
7. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof,
be entitled to any rights of a stockholder in the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant.
8. ADJUSTMENTS.
8.1 ADJUSTMENT FOR RECAPITALIZATION. If the Company shall
at any time after the date hereof subdivide its outstanding shares of Common
Stock by recapitalization, reclassification, or split-up thereof, the number of
shares of Common Stock subject to this Warrant immediately prior to such
subdivision shall be proportionately increased, and if the Company shall at any
time after the date hereof combine the outstanding shares of Common Stock by
recapitalization, reclassification, or combination thereof, the number of shares
of Common Stock subject to this Warrant immediately prior to such combination
shall be proportionately decreased. Any such adjustment and adjustment to the
Exercise Price pursuant to this Section 8.1 shall be effective at the close of
business on the effective date of such subdivision or combination.
Whenever the number of shares of Common Stock purchasable upon the
exercise of this Warrant is adjusted, as provided in this Section 8.1, the
Exercise Price shall be adjusted to the nearest cent by multiplying such
Exercise Price immediately prior to such adjustment by a fraction (x) the
numerator of which shall be the number of shares of Common Stock purchasable
upon the exercise immediately prior to such adjustment, and (y) the denominator
of which shall be the number of shares of Common Stock so purchasable
immediately thereafter.
8.2 ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER.
In case of any reorganization of the Company after the date hereof or in case
after such date the Company shall consolidate with or merge into another
corporation or convey all or substantially all of its assets
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to another corporation, then, and in each such case, the Holder of this Warrant
upon the exercise thereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation, merger, or conveyance, shall
be entitled to receive, in lieu of the securities and property receivable upon
the exercise of this Warrant prior to such consummation, the securities or
property to which such Holder would have been entitled upon such consummation if
such Holder had exercised this Warrant immediately prior thereto; in each such
case, the terms of this Warrant shall be applicable to the securities or
property receivable upon the exercise of this Warrant after such consummation.
8.3 CERTIFICATE AS TO ADJUSTMENTS. The adjustments
provided in this Section 8 shall be interpreted and applied by the Company in
such a fashion so as to reasonably preserve the applicability and benefits of
this Warrant (but not to increase or diminish the benefits hereunder). In each
case of an adjustment in the number of shares of Common Stock receivable on the
exercise of the Warrant, the Company at its expense will promptly compute such
adjustment in accordance with the terms of the Warrant and prepare a certificate
executed by two executive officers of the Company setting forth such adjustment
and showing in detail the facts upon which such adjustment is based. The Company
will forthwith mail a copy of each such certificate to each Holder.
8.4 NOTICES OF RECORD DATE, ETC. In the event that:
(a) the Company authorizes the granting to Common Stock
holders of any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities; or
(b) the Company authorizes any capital reorganization of
the Company, any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another corporation, or any
conveyance of all or substantially all of the assets of the Company to another
corporation or entity; or
(c) the Company authorizes any voluntary or involuntary
dissolution, liquidation, or winding up of the Company,
then, and in each such case, the Company shall mail or cause to be mailed to the
holder of this Warrant at the time outstanding a notice specifying, as the case
may be, (i) the date on which a record is to be taken for the purpose of such
right, and stating the amount and character of such right, or (ii) the date on
which such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation, or winding up is to take place, and the time, if any
is to be fixed, as to which the holders of record of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation, or winding up. Such notice shall
be mailed at least thirty (30) days prior to the date therein specified.
8.5 NO IMPAIRMENT. The Company will not, by any voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Company, but will at all times in
good faith assist in the carrying out of all the
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provisions of this Section 10 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.
9. TRANSFER TO COMPLY WITH THE SECURITIES ACT. This Warrant and
any Warrant Shares may not be sold, transferred, pledged, hypothecated or
otherwise disposed of except as follows: (a) to a person who, in the opinion of
counsel to the Company, is a person to whom this Warrant or the Warrant Shares
may legally be transferred without registration and without the delivery of a
current prospectus under the Securities Act with respect thereto and then only
against receipt of an agreement of such person to comply with the provisions of
this Section 9 with respect to any resale or other disposition of such
securities; or (b) to any person upon delivery of a prospectus then meeting the
requirements of the Securities Act relating to such securities and the offering
thereof for such sale or disposition, and thereafter to all successive
assignees.
10. LEGEND. Unless the shares of Warrant Shares have been
registered under the Securities Act, upon exercise of any of the Warrants and
the issuance of any of the shares of Warrant Shares, all certificates
representing shares shall bear on the face thereof substantially the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED OR
OTHERWISE DISPOSED OF, UNLESS REGISTERED PURSUANT TO THE
PROVISIONS OF THAT ACT OR UNLESS AN OPINION OF COUNSEL TO THE
CORPORATION IS OBTAINED STATING THAT SUCH DISPOSITION IS IN
COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
1.11. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing, with copies to all the other
parties hereto, and shall be deemed to have been duly given when (i) if
delivered by hand, upon receipt, (ii) if sent by facsimile, upon receipt of
proof of sending thereof, (iii) if sent by nationally recognized overnight
delivery service (receipt requested), the next business day or (iv) if mailed by
first-class registered or certified mail, return receipt requested, postage
prepaid, four days after posting in the U.S. mails, in each case if delivered to
the following addresses:
If to the Company: HC Innovations, Inc.
10 Progress Drive, Suite 200
Shelton, CT 06484
Attention: David Chess, MD, CEO
Telephone: (203) 925-9600
With a copy to: Gersten Savage, LLP
600 Lexington Avenue
New York, New York 10022
Attention: Jay M. Kaplowitz, Esq.
Telephone: (212) 752-9700
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12. APPLICABLE LAW. The Warrant is issued under and shall for all
purposes be governed by and construed in accordance with the laws of the State
of Delaware, without regard to the conflict of laws provisions of such State.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf, in its corporate name, by its duly authorized officer, all as of the
day and year first above written.
HC INNOVATIONS, INC.
By:
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Name:
Title:
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WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to (i) exercise the within
Warrant to purchase __________ shares of the Common Stock of HC INNOVATIONS,
INC., a Delaware corporation, pursuant to the provisions of Section 1 of the
attached Warrant, and hereby makes payment of $__________ in payment therefore.
The undersigned's execution of this form constitutes the undersigned's agreement
to all the terms of the Warrant and to comply therewith.
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Signature
Print Name:
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Signature, if jointly held
Print Name:
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Date
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ASSIGNMENT FORM
FOR VALUE RECEIVED_____________________________ ("Assignor") hereby sells,
assigns, and transfers unto _______________________________ ("Assignee") all of
Assignor's right, title and interest in, to and under this Warrant issued by HC
INNOVATIONS, INC. dated ______________.
DATED:
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ASSIGNOR:
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Signature
Print Name:
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Signature, if jointly held
Print Name:
ASSIGNEE:
The undersigned agrees to all of the terms of the Warrant and to comply
therewith.
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Signature
Print Name:
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Signature, if jointly held
Print Name:
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